Q1 Guangdong Spot Premiums PlungedโWhat Lies Ahead?
The premium/discount of Guangdong spot zinc fell sharply in the first quarter. What were the reasons?
According to the data, the premium/discount of Guangdong spot zinc reached 620 yuan/ton around January 10th, hitting a two-year high. The reasons mainly include two aspects. Firstly, it was mainly affected by the low social inventory. Secondly, it was driven by the high downstream stocking demand before the Spring Festival, which pushed the overall market premium/discount to keep rising. Subsequently, the market premium/discount began to fall sharply as downstream enterprises started to take their holidays, and it has remained at a low level with fluctuations. So, how will the premium/discount of Guangdong change in the future? This article will analyze it from three aspects: social inventory, downstream consumption and zinc price.
Firstly, from the perspective of social inventory, the current social inventory in Guangdong is at a four-year low. As of March 13th, the total inventory of zinc ingots in Guangdong was 18,600 tons, significantly lower than the historical average of 20,000 to 50,000 tons. This low inventory level has led some traders in the market to hold a relatively high price support attitude, making a sharp drop in the premium/discount less likely.
