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SunSirs: Adequate Supply and Declining Demand, Zinc Prices Fell below the 20,000 Mark
May 25 2023 14:09:40SunSirs(John)

Zinc price dropped below the 20,000 RMB mark

According to the Commodity Market Analysis System of SunSirs, as of May 24th, the zinc price was 19,712 RMB/ton, a 4% decrease compared to the previous trading day; and a year-on-year decrease of 23.20%. On May 24th, the spot zinc price fell below the 20000 RMB mark, setting a new historical low since March 2021.

Consumption off-season and low demand for zinc ingots

According to the Commodity Market Analysis System of SunSirs, since April, the price of galvanized sheet has fluctuated and fallen, and galvanized sheet and zinc oxide enterprises have started construction at a low level. The downstream of the zinc market was in a low consumption season, and the demand for zinc ingots was sluggish.

The domestic real estate market was weak

According to data released by the National Bureau of Statistics, from January to April, the national investment in real estate development reached 3,551.4 billion RMB, a year-on-year decrease of 6.2%. From January to April, the construction area of real estate development enterprises' houses was 7,712.71 million square meters, a year-on-year decrease of 5.6%. The newly constructed area of houses was 312.2 million square meters, a decrease of 21.2%. The completed area of houses was 236.78 million square meters, an increase of 18.8%. In April, the real estate development prosperity index was 94.78. The real estate market was weak and the prosperity index was insufficient, and the demand for zinc ingots was less than expected, increasing the downward pressure on the zinc market.

Weak Manufacturing in the United States

According to the latest data from S&P Global, the US announced the initial value of Markit's manufacturing PMI for May at 48.5, a three-month low and returning below the 50 boom and bust line. The manufacturing industry was weak, and demand for base metals was weak. Base metal prices had generally fallen, and zinc prices had plummeted.

Market outlook

Data analysts from SunSirs believe that in terms of supply, zinc concentrate processing fees are stabilizing, the impact of power restrictions in Yunnan is weakened, zinc smelting manufacturers are operating steadily, and the zinc market has sufficient supply. In terms of demand, in the off-season of the galvanized sheet and zinc oxide markets, demand for zinc ingots is weak, the real estate infrastructure market is declining, the expectation of zinc market demand is weakening, the performance of the US manufacturing industry is weak, and the international zinc market demand is weak, increasing the pressure on zinc prices to fall. In the future, there is sufficient supply and sluggish demand in the zinc market, and it is expected that the zinc price will fluctuate and fall in the future.

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