Price trend

According to SunSirs data monitoring, this week, zinc prices ushered in two consecutive declines, and the overall zinc market is still too low and began to fall. As of June 24, zinc quotation was 17,086.67 yuan/ton, a slight shock rise from the beginning of the month zinc price of 17,006.67 yuan/ton, an increase of 0.47%; compared with June 22 zinc price of 17,283.33 yuan/ton, a decrease of 1.14%.

Domestic zinc market output

From the refined zinc output data, it can be seen that although the zinc market will be affected by COVID-19 situation and the reduction of zinc concentrate processing fees in 2020, the output of refined zinc will grow slowly, and the output in May will decline slightly from April. The decline in refined zinc output is beneficial to the zinc market, but the overall output is still at a high level, and the zinc market has sufficient supply.

Zinc market import data

From the zinc ore import data, it can be seen that China's import of zinc ore in April was 460,647 tons, a month-on-month increase of 50.02% and a year-on-year increase of 158.27%. In April, domestic zinc ore imports were greatly increased, and the import volume of zinc ore increased significantly. With the arrival of goods, the supply of Chinese zinc mines is sufficient, and the pressure of excess supply in the Chinese zinc market in the short term is increasing.

From the import data of refined zinc, it can be seen that the number of domestic imported refined zinc has resumed growth. Although the data still has a large gap compared with the previous period, the overall zinc market is recovering and import growth is relatively large.

Downstream situation

In terms of automobiles, in May, my country's automobile production was 2.152 million units, an increase of 2.48% from the previous month and an increase of 19.00% year-on-year; in May, my country's automobile sales were 2.194 million units, an increase of 5.97% from the previous month and an increase of 14.48% year-on-year. The growth rate of automobile production and sales in the same month increased year-on-year, and the demand in the zinc market has recovered, which is good for the zinc market.

In terms of real estate, from January to May, the area of ​​housing construction of real estate development companies was 7.628628 million square meters, an increase of 2.3% year-on-year, and the growth rate fell by 0.2 percentage points from January to April. From January to May, the land acquisition area of ​​real estate development companies was 47.52 million square meters, a year-on-year decrease of 8.1%. In May, the real estate development prosperity index (referred to as the "National Housing Prosperity Index") was 99.35, an increase of 0.49 points from April. Although the real estate market in May was more prosperous, the slowdown in construction area growth and the decrease in land purchase area indicate that the real estate market has limited benefits for the zinc market and the zinc market has insufficient support.

In terms of home appliances, the output of air conditioners in May was 19.428 million units, a year-on-year decrease of 14.7%. From January to May, the cumulative output of air conditioners was 77.988 million units, down 23.1% year-on-year; the output of household washing machines in May was 6.083 million units, down 8.2% year-on-year. From January to May, the cumulative output of washing machines was 25.834 million units, down 10.6% year-on-year; the output of color TVs in May was 15.099 million units, up 5.3% year-on-year. From January to May, the cumulative output of color TV sets was 67.034 million units, a year-on-year decrease of 6.9%; May household refrigerator output was 7.767 million units, an increase of 7.4% year-on-year; from January to May, the cumulative refrigerator output was 28.453 million units, a year-on-year decrease of 12.7%. In terms of home appliances, although the market has picked up in May, the overall downward trend is obvious, and the zinc market bears more pressure.

Analytical review and outlook

SunSirs analysts believe that the recent positive factors in the zinc market have stimulated more, pushing zinc prices up. However, the upward momentum of the zinc market is not lasting. The downstream demand seems to be picking up. More is the concentrated outbreak of early consumption backlog, which is not lasting. On the contrary, when COVID-19 spread to the international market, domestic imports of zinc mines and refined zinc were increased, and the oversupply of the zinc market intensified. The recent decline in processing fees for zinc concentrates has led to a decline in domestic refined zinc output, but overall output is still at a high level, and the zinc market has sufficient supply. In general, the zinc market demand stimulus cannot be sustained, sufficient supply increases, the zinc market has insufficient upside momentum, and the downward pressure is still there. It is expected that the future zinc price shocks will stabilize.

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

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