Zinc price to be pressured by inventories buildup after National Day holiday

SHANGHAI, Sep 28 (SMM) – Spot zinc price is likely to face downward pressure after the National Day holiday, as smelters' improved producing enthusiasm, weak downstream demand, and inflow of imports will grow inventories of the metal, SMM believes. 

Rising zinc price and treatment charges (TCs) for zinc concentrate pulled up smelters' profits to a healthy level, and this supported their producing enthusiasm. While transaction suspends during the upcoming National Day holiday, zinc smelters usually keep normal operation, which will increase zinc inventories.  

On the demand, robust zinc price deterred downstream plants from purchasing, and thus led to weaker orders compared with a year ago. Some downstream mills have scheduled to halt production for 3-4 during the National Day holiday, SMM learned. After the holiday, consumption will be pressured further by curbs for the following heating season.

Short squeeze in the domestic market, though eased a bit, is still likely to provide some support to SHFE zinc price during the six trading days before delivery day next month. After the delivery, however, imported cargoes are expected to arrive gradually, growing domestic inventories. 

SMM assessed price of #0 zinc ingot at 22,650-22,750 yuan/mt as of Friday September 28, up over 1,300 yuan/mt from last Monday.