[SMM Analysis] the large monthly decline in social inventory of refined zinc is mainly driven by the power of galvanized plate.

SMM4, 10 March:

As of April 10, stocks in Shanghai, Tianjin and Guangdong stood at 285800 tons, with total inventories down 52100 tons from 337900 tons in the same period last month. Of this total, Shanghai fell by 24100 tons, Guangdong by 5000 tons, and Tianjin by 13200 tons.

According to SMM, the largest decline in zinc ingot inventory has been recorded in Shanghai, mainly due to the resumption of the epidemic in March, the overall orders of large and medium-sized galvanized sheet mills and galvanized structural parts factories in the lower reaches of East China have gradually warmed up, orders for iron towers and galvanized pipes driven by infrastructure are better as a whole, and enterprises are more willing to buy and drive out of storage. In addition, due to the sharp fall in zinc prices in the middle of the month, some smelters slightly cherished sales, and some refineries slightly reduced production in late March due to problems such as shortage of raw materials. On the whole, the volume of storage in Shanghai decreased slightly compared with the normal period, offsetting the decrease in inventory.

In addition, the decline in inventories in Guangdong is relatively limited. On the one hand, most of the die casting zinc alloy enterprises in Guangdong still produce a backlog of orders from January to February, with fewer new orders. During the sharp drop in zinc prices in the middle of the month, some terminal enterprises issued orders to the alloy factory in advance from April to May. Downstream enterprises actively replenish production, but in essence, inventory is transferred from warehouse to downstream enterprise raw material inventory, the overall decline is relatively limited. In addition, due to the shortage of raw materials due to the production of alloys by some smelters, some zinc ingots need to be purchased to supplement the gap, and there is also a small support for the decline in Guangdong inventory.

Finally, the decline in inventory in Tianjin area is fair, although the recovery of galvanized enterprises is slow, basically completed in mid-March, but galvanized sheet and large galvanized pipe enterprises buy every fall, the amount of replenishment is larger, the overall drive to the warehouse is more obvious; in addition, some smelters want to keep the long order and the price drop slightly cherish the sale, Tianjin area in late March the overall storage volume is less, the overall effect, Tianjin area to the warehouse strength is better.

With the gradual recovery of orders from galvanized enterprises, as well as the impact of the overseas epidemic on the domestic consumer, it will be a serious blow to the export of galvanized sheet and the export order of die-cast zinc alloy. Overall, zinc consumption in the lower reaches of April may not be as expected, but it still depends on the galvanized plate. It is expected that the social inventory in Shanghai, Guangdong and Tianjin may be reduced by more than 10,000 tons in April.

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