SunSirs: International Market Panic, Chinese Zinc Prices Plummeted

Price trend

According to the monitoring of the SunSirs, the zinc market plummeted on Sunday, and the zinc price fell by 7.31% on the 19th. As of March 19, the spot price of zinc was 14,530.00 yuan/ton, which was a decrease of 8.88% compared with the zinc price of 15,946.67 yuan/ton at the beginning of the week. The international market panic spread domestically, and spot zinc prices fell sharply.

Market trend

Fitch cuts zinc price forecast for this year

FitchSolution, an industry consulting agency, has reduced its zinc price estimate for this year from $ 2,450/ton to $ 2,250/ton. At this stage, production stops in China and other parts of the world have increased. At the same time, the agency said that the processing fee of zinc concentrate has been rising throughout 2019 and 2020 (in the supply contract), and the increase in the processing cost of zinc concentrate has encouraged Chinese zinc smelters to increase output in the second half of this year, which may lead to market supply shortages have shrunk. When demand is limited, zinc inventories have increased significantly, leading to a decline in market participants' optimism. The driving force for the rise in zinc prices has weakened, and downward pressure has increased.

International zinc prices have been falling for many days

The zinc price in the LME market has fallen sharply for three consecutive days. On March 18, the zinc price has fallen to $ 1,819/ ton. The decline in international zinc prices has a negative impact on domestic zinc prices. The negative pressure on the zinc market has increased.

U.S. retail sales monthly rate in February hits lowest since January last year

The monthly retail sales rate in the United States in February was -0.5%, with an expected value of 0.2%. The previous value was revised from 0.3% to 0.6%. The monthly rate data reached a new low since January last year. Analysis predicts a surge in grocery purchases in March, but the situation in April will be very bad. The decline in U.S. consumption reflects the weakness of the global consumption environment this year, the global economic downturn, and the zinc market demand is expected to decline sharply. The negative outlook for the zinc market will increase.

Domestic zinc production from January to February

Data released by the National Bureau of Statistics on Tuesday showed that Chinese zinc production from January to February was 1.004 million tons, a year-on-year increase of 12.9%. The high level of domestic zinc processing fees has made zinc smelting enterprises more enthusiastic in production, increasing zinc market supply and increasing zinc inventory.

The delivery fee standard for multiple domestic varieties of futures was adjusted to 0

The previous issue also announced that from April 10, 2020 to January 8, 2021: copper, aluminum, zinc, lead, nickel, tin, rebar, wire, hot rolled coil, stainless steel, gold, silver, natural Rubber, pulp, fuel oil, petroleum asphalt futures delivery fee standards are temporarily adjusted to 0.

Forecast

SunSirs analysts believe that although countries have certain economic stimulus plans recently, the multiple circuit breakers of the stock market reflect that the economic stimulus plan has not brought much confidence to the market. Global market demand is expected to decline sharply in 2020. For the zinc market, the zinc price in the international market has fallen sharply for many days, and the negative pressure on the domestic zinc market has continued to increase. However, under the situation of expected sharp decline in domestic demand, the domestic zinc ingot production has not fallen accordingly. On the contrary, 1- In February, when most downstream customers stopped production, the domestic zinc ingot output increased by 12.9% year-on-year. Under the situation of insufficient demand, the supply increased and the zinc ingot price decline was inevitable. However, such a sharp drop on the 19th is still rare in the history of the zinc market, and the increase in supply is only a factor. The panic about the future global market demand is the main reason for the current drop in zinc prices. The panic psychology of the market must not be fundamentally changed, and zinc prices are unlikely to pick up in the future.

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