Zinc price awaits demand uptick

SHANGHAI, Mar 28 (SMM) – Zinc prices are likely to stay rangebound with pressure as downstream consumption recovers slower given adequate supplies of ore, SMM believes.

China’s domestic consumption is affected as another round of cutback has been imposed on galvanising plants in north China earlier this week. The move was in response to the medium-to-high level of air pollution in the area. The restriction was estimated to be removed no earlier than Wednesday March 28.

Though short, the cutback affected demand as such restrictions have been enforced several times in north China this month.

Once the restriction is lifted, downstream demand is likely to pick up from April. However, it remains unclear if zinc smelters will cut production ito hold up offers.

Ore supply remains sufficient from both overseas and domestic mines. Smelters saw no issues in production, SMM learned.

Zinc inventories also weighed on prices although such pressure showed signs of easing.

LME zinc inventory stood at 210,725 mt on Monday March 26, down slightly from the previous week. Stocks in Shanghai, Guangdong and Tianjin dropped 19,200 mt to stand at 245,900 mt as of late last week, an SMM survey showed. We expect to inventories to dip further if downstream demand continues to pick up.

Although concerns of a China-US trade war eased, most participants adopted a watch-and-wait approach amid cautious sentiments.

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