LME zinc to trade between $2,470-2,640/mt this week

After the market priced in weaker expectations of the Federal Reserve interest rate cut, the People's Bank of China's (PBOC) fiscal policy bolstered market confidence, sending zinc prices rising rapidly to around 21,500 yuan/mt last week.

From a fundamental point of view, LME zinc inventories have dropped to around 193,000 mt. At the same time, the domestic ore supply continues to be tight. Some mines have also undertaken maintenance ahead of Chinese New Year holidays. Domestic ore supply has decreased. In addition, zinc concentrate inventories at ports have declined, keeping TCs weak. This grew the pressure on raw material purchases at smelters. It is expected that refined zinc output will continue to decline in January and February, and some downstream companies have already prepared for closures. The operating rates of galvanising, die-casting, and zinc oxide companies have continued to decline. It is also understood that most of the Chinese small enterprises will shut down at the end of January. Social inventories have increased slightly. As supply and demand are both weak, zinc prices are expected to fluctuate in a wide range.

LME zinc is expected to trade between $2,470-2,640/mt this week.

SHFE 2403 zinc contract prices: 21,000-21,800 yuan/mt;

Spot copper in China’s major markets is expected to trade with discounts of 50 yuan/mt and premiums of 50 yuan/mt.