SunSirs: Zinc Prices Completed Low Consolidation in July, Rising and Then Falling

Price trend

According to the SunSirs’ Commodity Market Analysis System, as of July 31, the zinc price was 22,296 RMB/ton, up 0.17% from 22,258 RMB/ton on July 1. In July, the market was immersed in a positive atmosphere of "anti-involution," and the Shanghai zinc price broke out of the previous low consolidation deadlock and successfully filled the gap.

Raw Materials

Zinc concentrate processing fees remained generally stable, with market transactions primarily focused on executing previously signed contracts. Imported zinc concentrate transactions were somewhat sluggish, with the domestic-domestic price ratio weakening this week. As a result, processing fees for imported ore saw a slight increase.

Supply and Demand

Zinc ingot premiums and discounts had shifted significantly, from positive to negative. This shift reflected a degree of adjustment in the market supply and demand relationship. From a market perspective, this indicated a relatively ample supply of zinc ingot in the spot market, which had strengthened buyers' bargaining power. Notably, the downward trend in premiums and discounts contrasted with the upward trend in prices. This may be due to some traders lowering their quoted premiums and discounts to expedite shipments, thereby driving an increase in actual trading volume.

Demand for die-cast zinc alloys in downstream industries like automotive and home appliances had been mediocre. While the automotive industry continued to release new models, overall market consumption lacked strong momentum, and sales growth was sluggish. This had prevented significant growth in demand for die-cast zinc alloy parts. The home appliance industry, impacted by a saturated market and the off-season, had led manufacturers to adopt a cautious approach to raw material procurement, primarily purchasing based on actual demand to maintain low inventory levels.

Future outlook:

August marks the transition between the industry's peak and off-season periods, and overall policy sentiment for the third quarter remains cautiously optimistic. However, fundamentally, expectations of increased supply and weak demand remain unchanged. Overall, zinc prices are more likely to remain volatile than to decline.

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