The short-term fundamentals of zinc remain unclear, focus on macro guidance [SMM Zinc Price Weekly Review]

SMM February 21 News:

Prices: Macro-wise, the US is expected to impose additional tariffs on copper imports, triggering a significant surge in copper prices, which in turn drove up non-ferrous metal prices. However, the subsequent imposition of a 25% tariff on imported cars by the US, along with the anticipated implementation of reciprocal tariffs on April 2, raised concerns about a global manufacturing slowdown, leading to a decline in market risk appetite and putting pressure on non-ferrous metal prices. On the fundamentals side, overseas LME inventory rapidly decreased to 144,575 mt, with the ratio of cancelled warrants still above 60%, drawing attention to zinc ingot exports from Singapore. Domestically, the thallium metal pollution issue in Hunan has been resolved, with relatively minimal impact on the lead and zinc industry. Additionally, as domestic TC rose above 3,400 yuan/mt (metal content) and sulphuric acid prices increased again, smelters' production enthusiasm improved, with routine maintenance generally postponed. New capacity in Henan also started production, with zinc ingot output expected by May, and smelter production continued to increase MoM. Consumption during the traditional peak season was relatively modest, coupled with zinc prices fluctuating at highs during the week, leading to a slight inventory buildup in social inventory, which remains at historically low levels. Moreover, with LME outperforming SHFE, the SHFE/LME price ratio is low, and zinc ingot imports are mainly based on long-term contracts. Inventory may still decline after zinc prices pull back. Overall, the imbalance in zinc prices on the fundamentals side is not yet evident, with attention focused on macro guidance and the final pricing of the Asian Benchmark.

(The above information is based on market exchanges and comprehensive assessments by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.)

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