SHANGHAI, Jun. 20 (SMM) – The SMM Zinc Demand Surprise Index (SMMZDSI) was 79 in May 2017, and 12 in June 2017. The index is expected to be 71 in July as consumption is promising, according to SMM.
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SMM survey finds the average operating rate at major zinc smelters was 74.04% in June, up 5.97% on-month. Output at some zinc smelters grew significantly in June due mainly to several reasons, SMM said. First, output at some zinc smelters recovered after maintenance or environmental protection checks. Second, profit increased thanks to higher TCs of domestic zinc concentrate. And high reservoir level also precipitated output growth. SMM survey shows operating rates at galvanizers and zinc oxide industries increased in June due to better consumption, and this tightened zinc supplies.
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Zinc consumption continued to improve in July despite declines in operating rates at galvanizers and die-cast zinc alloy producers, SMM survey shows. Meanwhile, output at zinc smelters was almost flat at June’s in July. In this context, zinc supply tightness did not ease.
The SMMZDSI is an objective and quantitative method of evaluation of zinc demand in China, and the index is issued around 15 every month, and the issuing date will likely be advanced for business development in the future. The SMMZDSI defines the spread between published data of refined zinc in China, and SMM surveyed and estimated data of domestic zinc downstream producers. After normalization, the spread is called the Surprise. When the reading is in positive territory, it indicates that zinc demand is above market expectation, and when the reading is above 50, it indicates a high chance for zinc futures prices to rise; when the reading is in negative territory, it indicates that zinc demand is below market expectation, and when the reading is below -50, it indicates a high chance for zinc futures prices to fall.
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