SHANGHAI, Oct 19 (SMM) – Slower downstream demand and greater supplies of zinc concentrate and refined zinc are likely to extend the weak trend of zinc prices in 2019, said SMM senior analyst Liu Mengyue.
She forecasted that LME zinc prices are likely to trade at $2,200-3,050/mt with prices of the SHFE contracts hovering at 18,000-24,000 yuan/mt in 2019.
Capacity resumption at several mines started to lower zinc prices from the start of 2018, after prices surged for two years, Liu told delegates at the annual SMM Price Forecast Conference in Shanghai on Friday October 19.
She expects zinc concentrate supplies in China to rise 4.1% in 2018, including some 1.44 million mt of imports and 4.12 million mt of domestic production. Environmental and safety issues in Hunan Huayuan and lower grades of ore in Inner Mongolia will continue to be key factors that limit the upward room in domestic supplies, she added.
Zinc production at smelters is expected to increase 180,000 mt to 5.6 million mt in 2019, as new capacity enters operation. Technical issues, thin profit margins, and environmental curbs drove some smelters to postpone to 2019 the commissioning of new or expanded capacity, Liu explained.
Operating rates in downstream galvanising, which accounted for the majority of zinc consumption, declined 4.6 percentage points year on year during January-September 2018. Orders from real estate companies and overseas consumers declined and this weighed on overall demand, Liu said.
In 2019, expectations of greater concentrate supplies will grow zinc social inventories, which currently stand at low levels around 100,000 mt, Liu added.
![Demanda de uso final decepciona y las tasas operativas del óxido de zinc bajan [Revisión semanal del óxido de zinc de SMM]](https://imgqn.smm.cn/usercenter/tAyyp20251217171754.jpg)
