LME inventories increased by over 10,000 mt for two consecutive days last week to exceed 90,000 mt, reaching the highest since May 2022. It is reported that most of the zinc ingots were imported from South Korea, indicating continued weak overseas consumption. However, with the end of the delivery period, short-term overseas delivery risks may have been alleviated, and attention should be paid to subsequent supply increases.
China imported 390,000 mt of zinc concentrate and 45,000 mt of zinc ingots in June, exceeding expectations. It is anticipated that import volumes will remain high in the future.
At the same time, domestic zinc concentrate TCs will continue to rise, indicating relatively ample supply at the mining end and increasing production enthusiasm among domestic smelters. Some smelters may increase production due to ample raw materials. In terms of consumption, apart from poor performance in die-casting zinc alloys, operating rates at galvanizing and zinc oxide sectors both showed YoY growth.
Galvanizing plate manufacturers are operating at about 70-80% of capacity, driving good operation for hot-dip galvanizing alloy enterprises. Overall, there is no obvious short-term supply-demand imbalance, and attention should be given to domestic policy guidance and the upcoming Federal Reserve interest rate meeting this week.
SHFE 2308 zinc contract prices: 19,800-20,800 yuan/mt. LME zinc: $2,330-$2,530/mt. Shanghai premiums: 80-150 yuan/mt.
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