SunSirs: Downstream Market is Expected to be Bearish, Zinc Market is not Optimistic

1. Price trend

According to the data monitoring of SunSirs, the zinc price rose first and then fell in January, and the future market is not optimistic. As of January 31, the spot price of zinc was 18,560.33RMB/ton. The price of zinc fluctuated and fell after a short rise in the first ten days of January. With the continuous decline of external price, the downward pressure of zinc market increased, and the price of zinc fell 15.61% year-on-year compared with the same period last year.

2. Market trend analysis

Domestic zinc Market

In the first ten days of January, affected by the stock up of Spring Festival, zinc market demand rose shortly, and zinc price was stimulated to recover. With the end of the stock up, zinc price fell, fluctuated and stabilized. During the Spring Festival, affected by the epidemic, downstream enterprises respond to the call of the state to postpone the time of work, and the downstream demand is expected to decrease. At the production end, the production of refined zinc and zinc mines is relatively stable, with limited impact. In terms of export, affected by the epidemic situation, it is expected that the export of zinc products such as zinc and galvanized sheet will decrease significantly. The demand of zinc market in the future is declining, the supply is stable, the negative situation of zinc market in the future is increasing, and the market situation of zinc market is negative.

International LME Market

The price of zinc in LME market rose first and then fell. Since the outbreak, the price of zinc fell to the end, and did not improve. The international zinc price fell, the market risk aversion psychology was prominent, and the future market was bearish.

China Manufacturing Purchasing Manager Index

As of January 20, 2020, the purchasing manager survey results show that in January 2020, China's Manufacturing Purchasing Manager Index (PMI) was 50.0%, a slight drop of 0.2 percentage points from last month, which is at the critical point. The overall macro-economic environment is general, which is of limited benefit to zinc city. Affected by the epidemic situation, the economic performance in February is still not optimistic, and the zinc market in the future is negative.

3. Future prospects

Analysts of SunSirs believes that in early January, affected by the stock up of the Spring Festival, the zinc market recovered and the zinc price rose briefly; but with the end of stock up, the zinc market fell back; during the Spring Festival, the outbreak of the epidemic, the international market risk aversion mentality was prominent, the zinc market was bearish and the zinc price fell sharply. In the demand side, the macroeconomic performance is general, the impact of the epidemic situation, the future market demand is expected to decline significantly, the demand of zinc city is expected to decline, while the supply side is relatively stable, and the overall supply of zinc city is still serious. Generally speaking, the downstream market is bearish, the supply of zinc is stable, the zinc market is not optimistic, and the downward pressure is large. Domestic zinc market may usher in a rapid decline after opening.

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

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