[SMM analysis] the epidemic situation has a significant impact on zinc concentrate. Is there still room for upward revision of the internal and external price of zinc?

SMM5 March 10:

As of this week, overseas outbreaks have not been effectively controlled, and the number of new infections per day continues to be at a high level. Although some European and American countries have begun to restart their economies, there are also countries that have extended the blockade (which is highly related to zinc: Peru, a major mineral country, extended its state of emergency to May 24), and the overseas situation is still hardly optimistic.

目前国内因进口矿流入不足、矿供给收紧，加工费迅速下跌至5000元/金属吨附近，国内有部分冶炼企业计划在未来1-2个月检修停产以应对，即国内供应端的影响已经开始传导至冶炼厂的实际生产，供应端的故事仍未结束。在此，SMM认为目前国内矿端紧张故事，放到全球范围内应该不是个例，在此以2019年全球锌锭产量排名前十的国家为例，排名前5的国家除了印度外均需要进口锌矿补充，其中韩国、日本本土无锌矿供应，全然依赖进口。从进口结构上来看，澳大利亚、秘鲁、墨西哥几个主要矿产国扮演主要补给角色。

With the exception of China, 47% of zinc concentrates are supplied by the Americas, represented by Peru, the fourth United States, sixth Mexico and eighth Canada, which ranks second in global zinc production. 19% of Asia is mainly contributed by India, while India basically realizes the integration of mining and smelting, with exports mainly reflected in zinc ingots and small quantities. Australia, Oceania is the third largest zinc producer in the world. Under the raging overseas epidemic, there are announcements in Mexico, Peru, Australia and other places that zinc concentrate production has been disturbed, and the current announcement will resume production is relatively limited, but the side evidence that in the later stage, smelters that rely on imported zinc ore supplies may also have an impact, and SMM will continue to follow up on this.

At one point this week, the import profit window opened and then closed again, as many countries considered restarting their economies, which means that overseas consumption falling to the freezing point is beginning to show signs of breaking the ice, and foreign trade lying on the ground at home is also expected to rise, which is good for zinc. The story of the supply side has the power of consumption, both inside and outside. As far as the depth of the impact is concerned, at present, the social inventory of zinc 7 in China is 237000 tons, and that of the bonded area is still 65500 tons, which is above the safety warning line, while the LME zinc inventory is only 100000 tons, which is still at a low level. If the overseas supply side story is further fermented, the room for zinc replenishment is higher, and the internal and external price comparison will be repaired under pressure. However, if there can be a strong domestic zinc consumption to follow up, then zinc is expected to be stronger, internal and external prices are expected to maintain the current high.

But at present, the domestic demand for imported zinc is not high.

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