Price Trends

According to monitoring by the SunSirs commodity market analysis system, as of June 11, the price of 0# zinc stood at 24,152 RMB/ton, down 2.25% from the 24,708 RMB/ton recorded on June 1.

Fundamentals

A confluence of macroeconomic factors has dampened sentiment in the non-ferrous metals sector. The Federal Reserve adopted a generally hawkish stance at its June policy meeting, and US non-farm payroll data for May significantly exceeded expectations; consequently, the market is once again confronting a scenario of "strong employment combined with rising inflation," maintaining pressure stemming from the sector's financial attributes. Escalating tensions in the Middle East have heightened concerns regarding inflation and the risk of an economic slowdown, driving London zinc prices down by approximately 1% and signaling a marked decline in market risk appetite.

Supply Side: The Strongest Fundamental Support

Zinc concentrate treatment charges (TCs) remain at historically low levels, with the pricing of domestic ore declining further month-on-month in June. The acute shortage of ore has severely eroded smelter margins; with TCs hitting new lows and the price of the by-product sulfuric acid retreating, most smelters have fallen into actual operating losses. This has forced a shift toward involuntary production cuts: expectations for widespread maintenance at domestic smelters in June have risen, tightening the supply of refined zinc. Additionally, the continued drawdown of LME zinc inventories has provided a floor for prices.

Demand Side: The Primary Headwind

With the arrival of the rainy season in the south, end-user demand is gradually entering the traditional off-season. Operating rates for galvanizing enterprises have declined, and those for die-casting zinc alloy producers have fallen in tandem; both remain at low levels compared to the same period in previous years. Downstream enterprises generally hold a bearish outlook on the market, limiting procurement to immediate needs and showing little willingness to restock. End-market consumption also lacks bright spots: the marginal boost from rebounding infrastructure investment growth has been limited, while production of automobiles and home appliances has contracted and the real estate sector remains sluggish. Compounded by declining risk appetite regarding external demand, overall demand lacks sufficient support.

Market outlook

The short-term trend has shifted toward weakness, with prices exhibiting a pattern of downward drift following a period of high-level oscillation; however, the downside is constrained by the rigid support provided by tight ore supplies and smelting losses. The market is currently in a tug-of-war between bearish macroeconomic factors and fundamental support at the lows, with the 24,000 RMB/ton level serving as a critical dividing line between bulls and bears. From a medium-to-long-term perspective, key factors to monitor in mid-to-late June include the extent to which planned maintenance and production cuts at smelters actually materialize, and whether domestic inventories show sustained destocking; these two elements will be the primary catalysts determining whether zinc prices can stabilize and rebound.

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