SMM7 March 31: optimistic expectations of monetary easing and a series of economic stimulus plans in the United States, the recovery of macro sentiment to boost zinc prices, but Sino-US relations are still uncertain macro factors, need to pay close attention to. In July, the Shanghai Zinc Index as a whole showed an upward trend, reaching a peak of 18915 yuan / ton. As of noon today, it closed at 18710 yuan / ton, an increase of 11.27% in the month.
Looking back in July, the zinc supply side showed an upward trend, while the consumer galvanized plate order is still the main support, relatively stable and improved. SMM believes that infrastructure construction is expected to drive downstream zinc consumption, long-term consumption may exceed expectations, zinc prices will maintain a strong trend.
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Expected increment of TC supply of zinc concentrate after bottoming out
According to SMM research, as of July 24, the TC of domestic zinc concentrate was 5300 yuan / metal ton, up 300 yuan / ton compared with the lowest 5000 yuan / metal ton. The rise of processing fees increases the production enthusiasm of the smelter, and as the mine supply returns to normal, the raw material inventory level of the smelter is about one month, which is at the normal level. On the whole, the smelter is in the process of resuming production and increasing production in July, and the long-term supply side pressure will increase.
Infrastructure supports galvanizing consumption and future consumption is expected.
Galvanizing enterprises are mainly concentrated in North China, and there is a high correlation between inventory and capital construction fixed assets investment in Tianjin. The epidemic led to the collapse of domestic zinc consumption in the first quarter of 2020, but under the government policy of ensuring employment and stabilizing the economy, infrastructure will still be one of the main means to support the economy, driving galvanizing consumption is still strong and resilient. It is expected that after the rainy season and the end of the flood situation, there will be a rush period and concentrated production of infrastructure projects.
Previously, the Ministry of Transport said that in the first half of the year, transportation investment was 1.45 trillion yuan, an increase of 6% over the same period last year. In the second half of the year, it will further expand fixed asset investment in transportation and give greater play to the important role of transportation investment in serving "six stability" and "six guarantees."
According to the National Railway Group, in the first half of this year, 115 large and medium-sized infrastructure projects under construction on the road fully resumed work and production, with a total of more than 8000 sites and more than 600000 entrants. The national railway fixed asset investment reached 325.8 billion yuan, exceeding 3.8 billion yuan in the same period last year, an increase of 1.2 percent over the same period last year, of which national railway infrastructure investment reached 245.1 billion yuan, an increase of 3.7 percent over the same period last year. In the second quarter of this year, the country's investment in railway infrastructure reached 179.7 billion yuan, an increase of 16.4 percent over the same period last year, making up for the deficit in investment in the first quarter.
To sum up, with the strong support of the state, infrastructure may have better-than-expected performance to boost galvanizing consumption.
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