[abnormal market] LME zinc inventory continues to rise & US dollar rises and zinc falls again

SMM4 18: after a little respite yesterday, LME zinc stocks increased again today by 7225 tons to 73575 tons, the highest level since February 25 this year. Since 12 April, LME zinc stocks have increased by 21375 tons.

For the future, SMM said in a previous article on "where will zinc prices go after a sharp fall in [SMM analysis] after a sharp fall in zinc prices":

On the one hand, for overseas: inventory is still a crucial factor, if does not constitute a long-term, sustained inventory increase, overseas leadership will not change, SMM still believes that overseas hidden inventory is limited.

On the other hand, at home.

One: the consumer side. As of today, the decline in domestic inventory is still limited, with the spot quotation as a reference, this year's three spot transactions have been mediocre. In terms of primary consumer performance, galvanizing has overdrawn part of its April consumption due to tax differentials, and the order boost from infrastructure shortfalls still needs to wait patiently. The terminal expansion space of die casting and zinc oxide is relatively limited and the performance is relatively stable. Generally speaking, the supporting force of capital construction still needs to be observed.

Second: the supply side.

1) domestic smelter. First of all, it is certain that, stimulated by profits, smelter production will gradually increase and return to normal levels. Expectations are stronger after May.

2) imported zinc. Take full account of the continued surge in imports in 2017-2018, there is a trade transfer of LME zinc stocks, but this year LME zinc stocks are already relatively low, trade transfer space is limited, imports this year will be less likely to return to the normal level of 50-600000 tons. Based on the recent import ratio and profit and loss state, the space of import inflow is relatively limited.

Generally speaking, this year is no longer a replica of 18 years: 18 years is in the context of the gradual decline in domestic supply, the inflow of imported zinc to supplement consumer demand; This year, domestic supply will be self-sufficient, the domestic supply gap has narrowed sharply, and demand for imported zinc has weakened.

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