SHANGHAI, Jan 19 (SMM)－LME zinc has performed strongly since the start of the year. Similarly, SHFE zinc is also performing well.
Downstream companies have cut back operations significantly, SMM learned. As galvanizing companies in north China face environmental restrictions and higher energy costs, some companies have already shut down for the Chinese New Year holiday in mid-February, weighing down zinc consumption. Demand has been lacklustre and spot zinc in north China has been sold at discounts of 20-100 yuan/mt for a while.
It is likely that next week will see much downstream stockpiling. SMM's historical data showed that stockpiling is expected to increase 100,000 mt from late January to early March.
LME zinc inventories declined 75 mt to 180,100 mt yesterday (January 18). SMM believes that downward pressure is limited as inventories are low.
SHFE zinc has limited downward room but high prices discourage stockpiling, which results in excess inventory.
For editorial queries, please contact Daisy Tseng at firstname.lastname@example.org
For more information on how to access our research reports, please email email@example.com