SMM March 7 News:
Prices: Frequent macro events occurred, with Trump's tariff policy escalating; US ADP employment data fell short of expectations, raising concerns about a slowdown in US economic growth, and US stocks accelerated their pullback; global geopolitical developments under the Russia-Ukraine conflict. Domestically, coinciding with the Two Sessions, apart from the special government bonds of 1.3 trillion yuan, the outcomes were largely in line with market expectations: GDP growth around 5%, fiscal deficit ratio around 4%, moderately loose monetary policy, and timely RRR cuts and interest rate cuts. Overall, domestic policies continue to improve, but overseas macro conditions remain volatile, requiring attention to overseas macro changes. Fundamentals side, with the replenishment of port inventories, smelters' raw material inventory in February remained high at 28.44 days. In March, TC for ores accelerated to above 3,100 yuan/mt (metal content). Coupled with post-holiday mainstream sulphuric acid prices in major smelting regions rising to around 500 yuan/mt, along with other minor metal revenues, smelters have started to turn profitable, increasing their production willingness. Refined zinc production by smelters in February reached 481,000 mt, slightly exceeding expectations. In March, due to increased production days and fewer smelter maintenance activities, overall production is expected to exceed expectations, reaching 545,800 mt, with incremental supply potentially being gradually released. However, March coincides with the Asian Benchmark negotiation period. It is reported that a Chinese company signed a concentrate price of $60/dmt with TECK, and TECK intends to sell more zinc concentrates to Asia within the year. Attention should be paid to the actual progress of TC negotiations. On the consumption side, March is the traditional peak sales season, with enterprises primarily focusing on resuming work and production. Operating rates continued to rise MoM. Based on current information, enterprise production is mainly driven by existing orders, with limited new orders from end-users. Additionally, the domestic export rush has subsided. Attention should be given to the actual recovery in consumption in the latter half of the month. Considering the absolute low level of domestic social inventory, this currently serves as the strongest support for zinc prices. However, the incremental supply exerts certain pressure on zinc prices. After the digestion of macro sentiment, zinc prices may jump initially and then pull back. Further attention should be paid to changes in overseas macro sentiment and consumption performance.
(The above information is based on market communication and comprehensive evaluation by the SMM research team. The information provided herein is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.)
