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SunSirs: The Decline of Zinc Prices Had A Slowdown in August, Zinc Market Did Not Have An Increasing Trend in The Future

September 03 2019 03:43:10     SunSirs (Linda)

 

1. Prices Trend

According to the data monitoring by SunSirs, in August, the prices of Zinc have extended decline and seesawed lower, but the decrease has had a slowdown. The price of Zinc on Aug 30 was ¥19,026.67/t, 2.73% less than that of the beginning of August, which was ¥19,560.00/t; And the price was 12.53% lower than that of the same period last year.

2. Analysis of quotations tendency

Time

Price Range (Yuan/Ton)

Rate of Rising/Falling

2019, Jan

22160.00-22250.00

0.41%

2019, Feb

22530.00-22006.67

-2.32%

2019, Mar

22036.67-23226.67

5.40%

2019, Apr

23173.33-22133.33

-4.49%

2019, May

22133.33-21250.00

-3.99%

2019, Jun

21250.00-20233.33

-4.78%

2019, Jul

20276.67-19696.67

-2.86%

2019, Aug

19560.00-19026.67

-2.73%

According to the statistical data from SunSirs, the Zinc Market had poor showings in August, the prices continued to drop like before. Although the decrease has had a slowdown, it was expected that the main tendency of the Zinc Market will be seesawing and lowering in the future because of the lack of upward momentum the prices.

Domestic Zinc Production

Time

Monthly Production(10,000t)

Cumulative Production(10,000t)

Year-on-Year Growth(Last Month)(%)

Cumulative Growth(%)

2019, Jul

51.2

343.8

17.4

6.1

2019, Jun

51.3

281.5

10.3

2.3

2019, May

48

226.9

7.4

-0.6

2019, Apr

46.5

176.5

-0.4

-4.4

2019, Mar

45.3

130.6

0.4

-5.1

2019, Feb

--

85.1

--

-8.2

2018, Dec

50.9

568.1

-1.7

-3.2

2018, Nov

52

517.7

-7

-3.3

2018, Oct

50.1

465.2

-7.6

-3.1

2018, Sep

45.6

414.6

-10.1

-2.6

2018, Aug

43.1

369.5

-7.9

-1.4

2018, Jul

43.9

325.9

-3.5

-0.6

2018, Jun

47.5

282

-5

0

2018, May

45.7

234.5

0.4

1.6

2018, Apr

48.1

190.2

4.8

2.8

2018, Mar

46.9

142

0

1.7

2018, Feb

--

95.7

--

2.5

2017, Dec

57.6

622

7.3

-0.7

2017, Nov

60.3

565.3

7.5

-1.3

2017, Oct

57.7

505.4

3.8

-2.1

2017, Sep

53.7

449.4

-2.7

-2.5

2017, Aug

49.4

395.7

-4.6

-2.3

2017, Jul

47.6

346.2

-6.3

-2

In July 2019, domestic Zinc production had a sharp rise, the situation of insufficient supply gradually turned into oversupply. The cumulative growth of production was 6.1%, the prices of the Zinc Market would not be optimistic in the future.
 
The high processing fee of Zinc
According to statics, on 30 Aug, the processing fee of refined Zinc was 6,050-6,600RMB/t in China. The fee was obviously higher in 2019, which stimulated the companies to increase the production and thus leading to the larger risks of oversupply aftermarket.
 
Downstream Demand
Data from the National Bureau of Statistics indicate that real estate investment, sales, funds and so on all showed a downward trend from January to July. Investment in real estate development increased 10.6% year on year, the growth rate was 0.3% less than that of the first half year. Newly started floor space increased 9.5%, the growth rate dropped 0.6%; The in-position capital increased 7.0%, the growth rate dropped 0.2%; The sales area of commercial housing was 887.83 million square meters, decreased 1.3% year-to-year; The commercial housing’s area to be sold was 498.76 million square meters, 2.86 million square meters less than that of the end of June, 8.4% lower than that of the same period last year. Sales area decreased for 7 consecutive months, the area to be sold became less than 500 million square meters for the first time in the recent 6 years. The overall decline in data of real estate caused the significantly decreased demand for non-ferrous metals, including Zinc. In July, car sales declined 2.6%, showing a drop from a positive growth of 17.2% to a decline of 2.6%. In June, due to the change of emission standards, many manufacturers and dealers took promotional activities, which led to a 17.2% increase in automobile sales; The automotive industry’s demand for Zinc declined as the early consumption overdrew the one in the future market.
 
The stock of Zinc (Futures) fell in Shanghai

Time

Stock

Change

Transaction

Position/Change

1, Aug

42004

379

503252

489058 / -13390

2, Aug

42402

398

526504

467426 / -21632

5, Aug

41527

-875

538264

452402 / -15024

6, Aug

42987

1460

412174

444050 / -8352

7, Aug

42936

-51

631182

475718 / 31668

8, Aug

42184

-752

596794

484462 / 8744

9, Aug

40656

-1528

696774

494680 / 10218

12, Aug

39978

-678

708722

463818 / -30862

13, Aug

40231

253

385696

441852 / -21966

14, Aug

39276

-955

452656

437806 / -4046

15, Aug

41800

2524

371242

413128 / -24678

16, Aug

41100

-700

337494

410236 / 4168

19,Aug

40751

-349

350114

426486 / 16250

20, Aug

40447

-304

309894

413082 / -13404

21, Aug

39297

-1150

375458

422658 / 9576

22, Aug2

34965

-4332

422772

413374 / -9284

23, Aug

34789

-176

427196

426446 / 13072

26, Aug

34191

-598

437322

449330 / 22884

27, Aug

33814

-377

473126

412522 / -36808

28, Aug

33363

-451

445524

405370 / -7152

29, Aug

32210

-1153

356510

400276 / -5094

30, Aug

31382

-828

317396

389190 / -11086

From the table, it shows that Zinc stocks in Shanghai Futures Market seesawed and lowered in August, especially from late August, the stocks declined sharply. The decline in inventory and the decrease in supply have provided some basic support for the future revival of Zinc prices. The trading lots showed that from mid-August, the trading activities of Zinc has declined a lot, and from the late August, the lots have rebounded, but the overall Zinc market was not so active, and the market had low expectations on the rising of prices.
 
3. Prospect for the future
Bai Jiaxin, an analyst from SunSirs, believed that the high processing fee of refined Zinc stimulated the domestic production, the situation of insufficient supply gradually turned into oversupply; As for the downstream demand, the Real Estate Trend of the third quarter will fall and it is negative to the Zinc Market, the automotive industry has not been negative all the year round, and the demand for Zinc has been declining year by year, overall demand for Zinc would be bearish. The Zinc stocks in Shanghai Futures Market seesawed and lowered in August, the supply declined, which was good to the Zinc market. However, according to the trading activity, the market is still not optimistic about the rise of Zinc Market. Considering the cost and profit of Zinc ingot, there is little room for Zinc prices to fall. In summary, the supply of Zinc in the future is growing steadily, the demand of Zinc is not good, the motivation for rising is insufficient, the pressure of decline is weakened, and the price of Zinc in the future is expected to decline slightly, but there is no upward trend in Zinc market in the near future.
Related listed companies: Nonfemet(000060), CHIHONG Zn&Ge(600497).
 
 

 

 

 

 

 

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