[SMM Analysis] Guangdong Zinc spot discount shows inverted V trend in the future or will continue the discount state in the future.

SMM4, March 15: into April, LME zinc began to hand over frequently, zinc ingot inventory has increased by 26600 tons compared with the end of March, inventory is close to 100000. With reference to the post-festival inventory changes on domestic futures exchanges, in the case of an increase in supply and a significant decline in demand, LME delivery is in line with expectations:

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After the Spring Festival, against the background of the slow recovery of domestic demand and the still high start of smelters, domestic inventories rose sharply, with inventories in seven places exceeding 340000 tons, the highest level since 2017. The spot market supply exceeds demand obviously, the spot to the futures discount expands, especially in Guangdong, the spot to the futures in that month discount once expands more than 100 yuan, carries on the futures delivery to produce the profit, at the same time the smelter fund pressure is greater, also actively delivers the position, the Shanghai Futures Exchange warehouse receipt inventory increases, from 20, 000 tons before the festival to 94000 tons at one time.

At present, overseas consumption is affected by the spread of the epidemic, many countries close ports, logistics transportation is interrupted, affecting the transport of raw materials, at the same time, the lack of production and consumption caused by isolation is also greater. It is reported that due to the epidemic, more than 100 vehicle factories in 26 countries around the world shut down, the current overseas demand decline is obvious, the holder financial pressure, delivery cash in line with expectations, but also caused the explicit zinc ingot hidden inventory, we believe that the return of zinc ingots to the LME warehouse for delivery has been opened, the follow-up LME zinc ingot inventory continues to increase the certainty is high.

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