[SMM Analysis] where and where does the upward momentum of Shanghai Zinc rise come from?

SMM5, 7 Feb. / PRNewswire-FirstCall-Asianet /

Today, the Shanghai Zinc Index jumped 2.49%, where did the upward momentum come from?

On Friday, due to a strong short sell-off, Shanghai Zinc's main 1807 contract under the 23000 yuan / ton integer psychological position, the situation suddenly reversed at night. Should be aware that the rise is mainly driven by short positions, as of today's close, the Shanghai Zinc Index has reduced positions by 25700 hands.

As far as zinc fundamentals are concerned, although there are long-term bearish expectations, is there a possibility of overfall in zinc?

First, the increase in domestic mine-end processing fees has not been able to drop the bag for security, has been stable for a long time, and the domestic mine supply is not easy. however, the benchmark TC price of zinc concentrate abroad in 2018 is US $147 / dry ton, down 14.5% from US $172 / dry ton in 2017. Is the lowest base price since 2006; After March, due to the continuous decline of zinc prices, the major smelters have reduced production and maintenance one after another. in April, the operating rate of zinc smelters was only 72.1%. In May, according to the latest research by SMM, there are still refineries and maintenance, and the supply side is still tight as a whole.

Second, when downstream enterprises returned after the festival, consumption suffered from the cold spring because of the two sessions and environmental protection reasons. the peak consumption season was postponed to April-May, production was accelerated in April, and social inventories in the three places decreased by 65400 tons in April alone. The consumer side as a whole is relatively stable.

Third, in the near future, strong and weak, Lun zinc fundamentals are more serious pressure, linkage under the drag on the internal market trend, today because of the spring bank holiday Lun zinc closed one day, Shanghai zinc independent operation restraint weakened.

In addition, today's market risk appetite is heating up, last Friday, the first round of Sino-US trade negotiations ended, although there are still more important issues to be discussed, but on the current position of China and the United States, there is no risk of continuing to hit each other; In addition to the introduction of new rules on capital management last week, since the Spring Festival has been in a tight state of capital end relaxation expectations, in addition to the colored sector today, other financial sectors are also rising at the same time. However, the general environment is repeated and the uncertainty is strong, so it is still necessary to keep an eye on it.

All factors pushed Shanghai Zinc to make a correction to the overfall part, and the integer support level of 23000 yuan / ton below is currently established.

However, this year's bonded area inventory is high and has been expected to flow in recently. although there is still no real hammer on the ground, volcanoes that have not yet erupted are still dangerous areas and need to remain vigilant. In the second half of the year, zinc fundamentals are not optimistic, it is expected that tomorrow after the review of zinc, Shanghai zinc upward pressure will increase. (SMM Li Ling)