[SMM Analysis] the differentiation of Internal and external fundamentals intensifies the Circulation of imported Zinc or will increase

SMM4, 24th:

Recently, the differentiation of zinc inside and outside has intensified, the Shanghai-Lun ratio has been revised up to about 8.45, the import loss has narrowed steadily, and the import loss has narrowed to less than 100 yuan this week, which means that the circulation of imported zinc in China is likely to increase gradually.

From the consumer side, because of the differences in the outbreak time, after the Chinese epidemic turned to the plateau period, the overseas epidemic began to break out and accelerate the spread, resulting in the domestic consumer side began to "restart", the overseas consumer end fell into a shutdown, so that many foreign trade enterprises order ups and downs: production shutdown, order surge, call off the order, and finally return to zero. The export orders of Chinese enterprises have been seriously damaged, and the drag on consumption cannot be ignored, but the confidence of the country's top management in stabilizing the economy is firm, and domestic demand under "infrastructure" is still resilient and tension. compared with overseas, which is still struggling near the freezing point, this is the internal driving force for the gradual expansion of internal and external prices.

The most effective way to prevent and control the epidemic is to control the gathering of personnel, learn from China's "anti-epidemic" experience, and since March, countries have taken measures such as opening a state of emergency, closing borders, issuing home orders, and holidays for the whole people. This has not only dealt a heavy blow to consumption, but also restricted the mining industry, resulting in overseas mining enterprises announcing the suspension or reduction of production as a result of administrative orders. The countries involved are Peru, Mexico, Bolivia, Argentina, India, South Africa and so on.

From the supply side, it directly leads to the temporary invalidation of the loose logic of zinc long-running mine supply. Considering that China's dependence on imported zinc concentrate is close to 30%, coupled with the isolation requirements put forward by some ports for ships to dock, it is inevitable that there will be a shortage of imported ore supply in the short and medium term, and the short-term contradiction will translate into a shortage of zinc ore. At the same time, processing fees have been gradually reduced as evidence, and domestic funds have begun to be distributed more. Excluding China, the natural surplus at the mine end, coupled with the fact that the expansion of zinc minerals in the past two years has been mainly contributed by overseas contributions, has led to the fermentation of the mine end story giving the overseas a lower level of boost than at home.

To sum up, the overseas epidemic situation has not yet been effectively controlled, and some countries have further extended the state blockade until mid-May, which means that there is still room for further fermentation of the Lido logic currently in operation, and there is the possibility of further expansion of internal and external price ratios. With the further narrowing of losses, foreign trade is expected to heat up, bonded area inventories may quickly transfer to China, considering the maritime pressure caused by the epidemic, new imports are expected to be limited.

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