1. Price Trend 　

According to SunSirs data monitoring, the zinc price first rose and then fell in May, the overall zinc price fluctuated slightly, and the zinc market rose weakly. As of May 31, the spot price of zinc was 16,690.00 yuan/ton, which was a slight shock increase from the beginning of the month, and the zinc price was 16,646.67 yuan/ton, an increase of 0.26%.

2. Domestic Zinc Production

From the data of the National Bureau of Statistics, it can be seen that domestic zinc production increased steadily in 2020. Although affected by COVID19, the growth rate of zinc production fell back in March, but zinc output rose rapidly in April. The overall domestic zinc market output was sufficient to make up for the domestic lack of imported concentrates, which resulting in oversupply in the domestic zinc market.

The policy is not as good as expected

At 9 am on May 22, Premier Li Keqiang of the State Council made a government work report to the Third Session of the 13th NPC on behalf of the State Council. The 2020 government work report did not propose specific targets for annual economic growth. Moreover, the adjusted target in the government report also differs greatly from the expectations. New investment in traditional infrastructure projects is limited. The increase in demand in the zinc market is less than expected, and the zinc market has insufficient momentum to rise.

Manufacturing purchasing managers index fell slightly

According to data from the National Bureau of Statistics of China, in May, China's manufacturing purchasing managers index (PMI) was 50.6%, down 0.2 percentage points from the previous month. Although production continued to recover in May and new orders also increased, the global economic situation remained severe and complex, and foreign market demand continued to shrink. The index of new export orders and imports of manufacturing in May were 35.3% and 45.3% respectively, both at historically low levels. From a macroeconomic perspective, the economy has picked up, and demand has followed the rise, but the growth rate is worrying and has not reached market expectations.

3. Analysis

SunSirs analysts believe that the national economy continued to pick up in May, the demand for base metals rose slowly, and the demand for zinc ingots followed the rise, but the growth rate in May fell somewhat compared with April. The growth rate of demand was not as expected, and the import and export weakness is a major blow to zinc market demand. There was no obvious good news released by the two associations, which made the market lack of confidence in the zinc market and the zinc price lost significant support. The continuous increase in the production of zinc ingots has caused the inventory of the zinc market to continue to rise, and the downward pressure on the zinc market has increased. In general, poor demand, excess supply, and weak zinc prices in the future market. The zinc market is expected to fall in June.

Related listed companies: Zhongjin Lingnan (000060), Chihong Zinc Germanium (600497).

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