[SMM Analysis] Don't panic! Shortage of Raw Materials & recovery of consumption Materials and short-term Zinc Price still support

SMM4 22: after the oil price overnight violence "negative", non-ferrous metals affected down, yesterday Shanghai zinc plummeted to 15535 yuan / ton, a drop of 3.07%. Zinc rebounded in Shanghai today, peaking at 15885 yuan / tonne and closing at 15860 yuan / tonne as of today, up 0.6 per cent.

At present, affected by the overseas epidemic, overseas supply side stories continue, supply is still relatively scarce. According to SMM research, the impact of the epidemic on the suspension of production in overseas mines reached 297100 tons. In 2020, the planned increment of zinc concentrate in the mine was 610000 tons, but the actual increase in output of overseas mines this year reached 310000 tons. Most overseas mines have been reduced and shut down as a result of the epidemic. If the ban is lifted, production will resume as soon as possible. However, at present, with the resumption of work and production of domestic mines, superposition of the current processing fees continue to decline, the follow-up domestic zinc concentrate supply may be slightly alleviated.

On the supply side, due to problems such as shortage of raw materials, some smelters have routine maintenance plans in the short term. Among them, the smelters involved in the production impact include Chifeng Zhongye, Xingan copper and zinc and copper crown, which are expected to affect the supply of zinc ingots by more than 13000 tons in the next two months, and the pressure on the supply end is slower than in the previous period.

On the consumer side, the galvanized plate mainly supports zinc consumption. Recently, driven by infrastructure and real estate terminals, large galvanized sheet and galvanized structural parts enterprises have a better order, and downstream enterprises have strengthened their efforts to buy when they fall. In addition, superimposed brass rod enterprises are subject to the shortage of imported waste copper supply, choose to buy zinc ingots and copper ingots ratio to reduce costs, but also led to some zinc ingot consumption, is expected to go to the warehouse this week is better, for zinc prices to support. According to SMM research, at present, there is a rush phenomenon in infrastructure projects, which is conducive to boosting zinc consumption. However, most of the terminal projects rush to complete the previous 2-3 months of the loss of the workload, after the end of the rush period, zinc consumption may gradually weaken.

SMM believes that looking forward to the second quarter, smelters have been overhauled one after another and raw material problems have given some support to the supply side, but the overseas economy has slowly restarted, external demand is expected to be bleak or improved, and consumption is likely to pick up step by step.

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