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SunSirs: Zinc Swung and Adjusted Narrowly in October, Future Market May be out of Its Doldrums

November 06 2019 13:59:20     SunSirs (Linda)

1. Price Trend

According to the data monitoring of the SunSirs, zinc prices swung and adjusted in September and October, but the range of zinc prices in October was narrowed, and the zinc market adjusted in a narrow range. On October 31, the price of zinc was 19,136.67RMB/t, 0.51% higher than that of October 1 (19,040.00RMB/t), and 0.58% higher than that of September 1 (19,026.67RMB/t). Zinc prices fluctuated and adjusted within the range, and the range was much narrower than that of September.

2. Market Trend

Price trend of zinc in LME Market

Zinc prices in LME futures market rose steadily in October. On October 30, LME zinc ingot quoted prices were 2,512-2,533USD/t, compared with the zinc priced of 2,308-2,348 USD/t at the beginning of September, zinc prices rose sharply. The prices of zinc in LME market has increased significantly, which is good for the domestic zinc market. The domestic zinc price shas increased its driving force, and the future zinc market is good.

Price trend of zinc in Shanghai Futures Market

In October, zinc prices in Shanghai futures market fluctuated and adjusted, and in general, zinc pricse rose slightly in October. On October 31, the prices of zinc ingot in Shanghai futures market were 18,875-19,055RMB/t, slightly higher than the average price of 18,670RMB/t at the beginning of October. In October, the zinc prices of futures recovered slightly, which is good for the domestic spot market, but the benefit is limited. It remains to be seen whether the upward momentum of Shanghai futures market can continue and affect the upward rebound of the spot market.

Domestic zinc production

Compared with 2018, the domestic zinc production in 2019 increased significantly year on year, and the zinc production kept a double-digit growth rate for four consecutive months. Compared with 2017, the output of zinc ingot in 2019 is equivalent to that in 2017, with a slight increase. It can be seen that the sharp decline of zinc ingot production in 2018 caused by environmental inspection has been alleviated, the production of zinc ingot has returned to normal, and the production capacity of zinc ingot has recovered. The increase of zinc ingot supply has a negative effect on zinc market prices.

Import and export data of zinc and its related products

In 2019, the export volume of zinc and its related products in China increased significantly year on year. From January to September, the export of these products increased by 25.4% year on year, and the import decreased by 0.6% year on year. The increase in exports and the decrease in imports have a greater positive effect on the domestic zinc market, and the prices of zinc have a certain driving force.

3. Prospects for the Future Market

According to an analyst of SunSirs, LME zinc prices have been rising steadily in recent two months in the international market. The international zinc market is good, which is good for the domestic zinc market. In the domestic zinc market, the demand of domestic spot market is low. The trend of zinc price in Shanghai futures market can be seen that the futures market has recovered in October. Although it can not be seen that the domestic zinc market has been rising, it is still good for the domestic spot zinc market; the continuous increase of zinc ingot production has brought a big negative effect on the rise of zinc price in the future, and the rise of zinc market is limited; the import and export data in 2019 shows that the domestic zinc market is still profitable this year, and there is still room for the future market to rise. Generally speaking, the positive performance of zinc market in the future is enhanced, and the decline of spot zinc may change, there is still room for future increase. Followed by the recovery of international zinc market, and the limited demand of zinc ingot supply, the space for zinc prices to rise is limited, and it is expected that zinc prices in the future will fluctuate slightly to high.

Related listed companies: Nonfemet(000060), CHIHONG Zn&Ge(600497).

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