SHANGHAI, Mar 16 (SMM) – The main market focus in March has been on the US non-farm payroll and CPI data for February. The Fed’s benchmark interest rate has been raised to around 5.5%, and the chronic high interest rate has dented the demand for commodities. On the supply side, domestic refined zinc output is expected to reach some 560,000 mt in March. High profits have spurred production and prompted the market to ratchet up their annual zinc ingot production targets.
On the demand side, domestic infrastructure projects are currently under concentrated construction. The orders of galvanising enterprises have improved from the previous month, but those of die-casting and zinc oxide enterprises have been sluggish. After rapid production resumption following the CNY holidays, the upward-sloping curve for operating rates was lower. Overseas smelters have seen profits restored on the back of lower electricity prices. In February, Nyrstar announced that its Auby zinc refinery in France would resume production.
On top of this, more European zinc refineries are expected to resume production. But the overall overseas demand is expected to fall against high interest rates. Domestic and overseas supply and demand as well as overseas liquidity all mean that the overall fundamentals of zinc are relatively bearish. Zinc prices are expected to be supported at 22,500 yuan/mt.