SHANGHAI, Jan 9 (SMM) - SMM estimates that the domestic refined zinc output in January, 2023 will shed 21,100 mt to 504,600 mt, down 12,900 mt or 2.5% from the previous year. Compared with the reduction in output during the Chinese New Year holiday in recent years, the decline in 2023 will be smaller. The main reason is that smelters are active in production for high profits, which suggests that the logic holds true that the domestic zinc ore surplus will translate to increased output in smelters. In terms of demand, the domestic zinc processing enterprises started to take holidays, and the final round of pre-holiday stocking was completed last week. It is estimated that trades in the market this week will be slacker than a week earlier, which will mark the beginning of an inventory accumulation cycle during Chinese New Year holiday. Overseas smelters have not yet resumed the production, so LME zinc inventory is unlikely to rise in the short term. The attention will be focused on the domestic zinc ingot growth during the holiday.
In addition, more favourable policies were introduced to boost the domestic real estate market last week, which lifted the market expectations for the demand in 2023. The overseas market was still facing torrid interest rate hikes when the interest rate continued to stand high. In general, the domestic zinc market will pick up, while the overseas zinc market may slip into a recession, with zinc prices to fluctuate wildly.
LME zinc is expected to move between $2,850-3,050/mt, while SHFE 2202 zinc contract is estimated to trade at 22,800-23,500 yuan/mt, with spot premiums at 100-200 yuan/mt.