Home / Metal News / Zinc / The short-term value of multi-factor fermentation of Shanghai zinc is higher than that of the first line.
The short-term value of multi-factor fermentation of Shanghai zinc is higher than that of the first line.
Jul 24,2020 09:51CST
translation
Source:Guangzhou futures
The content below was translated by Tencent automatically for reference.

SMM News: entering July, zinc prices are obviously stronger, the reason is that the fundamentals are too much, the supply of zinc concentrate is reduced, and the downstream demand is OK. China's epidemic prevention and control has achieved remarkable results, enterprises have resumed work and production in an orderly manner, macro data have warmed up, and market sentiment has been significantly boosted. Major overseas developed economies have frequently introduced economic stimulus packages to boost the strength of the outer disk, which is also good for Shanghai zinc. In the context of multi-factor continuous fermentation, it is expected that the Shanghai Zinc 2009 contract will continue to rise, paying attention to the resistance at the front 18500 yuan / ton integer gate.

Fundamental expectations are optimistic

According to the statistics of the output of nearly 70 lead and zinc mines of 34 companies (groups) in China, from January to June, the zinc concentrate was 830000 tons, down 62000 tons or 7.0% from the same period last year. The areas with the largest decline in zinc concentrate production were Yunnan and Inner Mongolia, with production falling by 36000 tons and 22000 tons respectively. Based on sample statistics, the national caliber output is estimated to be 1.798 million tons of zinc concentrate from January to June, down 76000 tons or 4.1% from the same period last year. In the first half of the year, the production of lead-zinc mines was disturbed by many factors: first, it was caused by the interference of the epidemic situation. After the Spring Festival, the time for mining enterprises to resume production was delayed than in previous years. After resuming work, the epidemic situation restricted the flow of personnel and the shortage of personnel on duty, which also restricted the improvement of the operating rate. Second, metal prices suffered a heavy blow after the Spring Festival, and the profits of mining enterprises were greatly compressed, which dealt a blow to the enthusiasm of mine production, especially some high-cost mines stopped production or continued to postpone the resumption of production; third, for individual super-large mines with an annual output of 100,000 tons of metal, the amount of raw ore mining is roughly the same as in previous years, but the problem of decline in zinc grade is more prominent, resulting in zinc metal production less than in previous years. It is expected that for the whole year, due to the epidemic leading to a substantial decline in production at the beginning of the year, the depressed market suppresses the production of small and high-cost mines, and it is difficult to increase the total output in the In addition, some large-scale mine projects expected to be put into production this year continue to be delayed, and the release of production during the year is limited. Therefore, the output of zinc concentrate for the whole year will have a negative growth compared with the same period last year.

As of July 17, the processing fee for zinc concentrate in the north was 5200 yuan per ton, compared with 6850 yuan per ton in the same period last year, and 5100 yuan per ton in the south, and 6400 yuan per ton in the same period last year. Processing fees in the north and south continue to be low during the year, reflecting a reduction in the supply of zinc concentrates.

On the demand side, the demand in the lower reaches of the zinc city has warmed up recently. According to data released by the China Association of Automobile Manufacturers on July 10, automobile production and sales continued to pick up in June, with monthly production and sales growing month-on-month and year-on-year, with commercial vehicles growing more significantly than the same period last year. In June, car production and sales reached 2.325 million and 2.3 million respectively, up 6.3 per cent and 4.8 per cent month-on-month, and 22.5 per cent and 11.6 per cent respectively over the same period last year.

In terms of real estate, from January to June, the cumulative investment in real estate development was 6.278021 trillion yuan, an increase of 1.90% over the same period last year, and the growth rate was 2.20% higher than that of January-May. From January to June, the construction area of houses was 7.9272118 billion square meters, an increase of 2.60 percent over the same period last year, and the growth rate was 0.30 percentage points higher than that of January-May.

Generally speaking, the supply of zinc is tight and the demand is good, which is good for the price of zinc.

The macro aspect brings a boost.

China's GDP data grew by 3.2% in the second quarter compared with the same period last year, taking the lead in rebounding among the major countries in the world. China's official manufacturing PMI was 50.9% in June, above the rise and fall line for four consecutive months. China's macro-economy has gradually recovered, and infrastructure projects will continue to move forward, which is good for the trend of zinc prices. In addition, the proper control of the epidemic in China has won a favorable time for the real economy to return to work and production, which has also boosted market sentiment, and zinc prices will also benefit from it.

Overseas, the United States and the European Union have recently issued frequent economic stimulus policies. On July 21, the European Union announced an economic recovery fund plan of 13 trillion euros, and the non-ferrous metals sector strengthened. Major overseas economies are enthusiastic about reviving the economy, but it should be noted that the overseas epidemic has not yet been brought under control, and the number of confirmed cases is still increasing. As a result, a series of economic recovery plans may not achieve the desired results, which in turn will force foreign economies to introduce more stimulus policies, and zinc prices will continue to be boosted.

To sum up, from the perspective of fundamentals, the domestic zinc concentrate processing fees have dropped to the low level during the year, the supply of zinc concentrate in China has shrunk, and the supply side has supported the zinc price; on the demand side, automobile and real estate data continue to pick up, and the performance of the lower reaches of the zinc city is OK. At the macro level, the epidemic situation in China has basically been brought under control, enterprises have resumed work and production one after another, macro data have improved, and market sentiment has been boosted. On the overseas side, economic stimulus policies continue to be issued to boost outer disk prices, and 2009 of the main contracts are expected to have room for upside in the short term, paying attention to the resistance of 18500 yuan / ton for the time being.

Scan the QR code and join the SMM metal communication group.

Shanghai Zinc
Futures

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn