Zinc Prices Give Up Gains [Institutional Commentary]

On Monday, the most-traded SHFE zinc ZN2506 contract rebounded during the day but was in the doldrums at night, while LME zinc was closed. Spot market: The mainstream transaction prices of 0# zinc in Shanghai were concentrated at 22,500-22,620 yuan/mt, with a premium of 150 yuan/mt against the 2505 contract. As the long-term contract approached its end, there were few traders in the market, and downstream users had certain inventories, purchasing only for rigid demand. Spot transactions did not improve, and the premium continued to decline. SMM: As of Monday, social inventory was 93,000 mt, down 7,000 mt WoW from last Thursday. Customs data: Zinc concentrate imports in March were 35.95 mt, down 22.09% MoM but up 47.16% YoY. Refined zinc imports in March were 27,500 mt, down 18.12% MoM and 40.5% YoY.

Overall, tariff negotiations made no substantial progress, and the new US president pressured Powell, increasing market concerns and putting pressure on zinc prices. March zinc ore imports met expectations, while zinc ingot imports slightly exceeded expectations. Refineries had ample raw materials, and supply increases were steadily realized. The peak consumption season supported downstream buying the dip, and inventory dropped to 93,000 mt, with low inventory supporting a weak rebound in zinc prices in the short term. As the rush for export orders was digested and the peak season approached its end, later consumption support was expected to weaken, and the sustainability of the zinc price rebound was insufficient.