SHANGHAI, Jan 27 (SMM) - Currently, apart from the production suspensions in answering to environmental protection requirements, some smelters also cut the production amid pressures from the mining side. In addition, some mid and small-sized smelters in Hunan underwent longer-than-usual maintenance. The domestic refined zinc output is likely to stand at 523,000 mt in January, and 487,000 mt in February due to the CNY holiday factor, according to SMM research.
The seasonal increase in zinc inventories has already surfaced as the downstream was closed for CNY holiday one after another. And the rising inventory will increasingly weigh on the prices. SMM believes that the inventory will rise by around 119,000 mt in February post the holiday, a low compared with the past few years. How fast the inventory will drop after the demand side returns to normal post the holiday is also worth of attention. SMM still advises the investors to go long on dips. Zinc prices are expected to move between 24,000-25,500 yuan/mt.
