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[SMM analysis] there is still room for rising water in Guangdong zinc ingots.
May 21,2020 16:10CST
translation
Source:SMM
SMM5 March 21: after the month of futures change, the spot rising water of zinc ingots in Guangdong market expanded again this week, approaching the post-April high in late April. How does the city interpret after the discounted price of Guangdong zinc ingots rise? we believe that it is necessary to increase the water level and expand the basis at present.
The content below was translated by Tencent automatically for reference.

SMM5, March 21: after the change of futures, the spot price of zinc ingots in Guangdong market expanded again this week, approaching the post-April high in late April. How does the market perform after the discount on zinc ingots in Guangdong? we think that at present, it is necessary to raise the water and expand the basis.

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1. The basis of a strong spot is often accompanied by a decline in inventory. Guangdong zinc ingot inventory has been declining since it exceeded 100, 000 tons in mid-March. at present, Guangdong zinc ingot inventory is only 56000 tons, nearly halved. We think that the Guangdong zinc ingot market remains in a state of de-stocking in the short term (for details, see the previous analysis article "Guangdong zinc ingot inventory continues to decline"), when the market inventory is low, Provide support for spot transaction prices.

2. At present, the price difference between the two places is still 120 min 130 yuan / ton. It is difficult for the volume of goods sent by smelters to Guangdong to increase significantly in the short term. If the price difference between the two places continues to widen, the inventory of zinc ingots in Guangdong will be transferred to East and North China in large quantities as in April this year, which will speed up the elimination of inventory and provide support to the spot transaction price in Guangdong market, or the holder will increase the quotation in Guangdong market in order to adjust the price difference between the two places. It will also boost transaction prices.

3. The futures price difference between the current month and the next month widened again, and by the end of the afternoon, the price difference of the next month widened to 85 yuan. under the background of the elimination of spot inventory, the price of the holder is strong, and the market quotation for the contract of the next month will be revised upwards, so there is still room for the spot to increase the rising water of the futures contract in the next month.

Generally speaking, under the circumstances that it is difficult to increase supply in the short term, the current demand in Guangdong market is relatively stable. Although alloy consumption is in the doldrums as a whole, galvanizing consumption is improving and battery demand is stable. While making up for a certain lack of consumption, it also supports the overall demand of the Guangdong market. We are still optimistic about the short-term spot performance of Guangdong.

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