Long-tail Effect of Banking Crisis Lingered, leading to a V-shaped Trend in both Domestic and Overseas Zinc Markets

Published: Mar 27, 2023 18:01
Source: SMM
LME zinc: The overseas market was still rattled by the macro front last week.

SHANGHAI, Mar 27 (SMM) - LME zinc: The overseas market was still rattled by the macro front last week. At the beginning of the week, the University of Michigan Surveys of Consumers said the one-year inflation outlook plummeted to 3.8%; the US dollar index continued to sink as the market expected the Fed to raise interest rates by 25 basis points. Since the risk aversion in the market outweighed the hopes for a possible halt in Fed's rate hikes when the banking crisis stoked the concerns over a faltering economy, the bearish market sentiment sent LME zinc prices falling. Subsequently, the Fed raised interest rates by 25 basis points as expected, but thankfully Powell's doveish speech boosted the market sentiment somehow. LME zinc prices thus climbed slightly and fluctuated. The US treasury secretary Yellen later changed her tune and said that "actions will be taken to protect deposits if necessary" when the market was still digesting the expectations that the Fed's interest rate hike will halt soon. As a result, LME zinc prices jumped and pared losses. Generally speaking, LME zinc showed a V-shaped trend last week. As of 15: 00 CST last Friday, LME zinc stood at $2,926.5/mt, a decrease of $6.5/mt, or 0.22% on a weekly basis.

SHFE zinc: The domestic market was disturbed by poor downstream consumption last week. At the beginning of the week, the domestic market was still absorbing the long-tail effect brought about by the banking crisis. This, coupled with falling SHFE zinc prices, dragged down SHFE zinc prices. Fortunately, the destocking of zinc ingot social inventory across seven major markets in China supported SHFE zinc prices to stabilise. However, the environmental protection-related control in Hebei affected the operating rates of downstream enterprises there, thus the weaker consumption of zinc ingots caused zinc prices to inch lower. Eventually, the bearish market sentiment was alleviated by Yellen's speech. The end of environmental protection-related production restrictions and the ongoing traditional peak season provided momentum for SHFE zinc prices, which, similar to LME zinc prices, rose again and recovered previous losses. As of 15: 00 CST last Friday, SHFE zinc closed at 22,680 yuan/mt, an increase of 290 yuan/mt or 1.3% from the previous week.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
Safety Issues at Xiangrong Mining Prompt Shutdown, Affecting Luoping Zinc's Zinc Concentrate Production
32 mins ago
Safety Issues at Xiangrong Mining Prompt Shutdown, Affecting Luoping Zinc's Zinc Concentrate Production
Read More
Safety Issues at Xiangrong Mining Prompt Shutdown, Affecting Luoping Zinc's Zinc Concentrate Production
Safety Issues at Xiangrong Mining Prompt Shutdown, Affecting Luoping Zinc's Zinc Concentrate Production
On June 3, Luoping Zinc & Electricity issued an announcement stating that the Puding County Emergency Management Bureau discovered safety issues at Xiangrong Mining during an on-site inspection. Currently, Xiangrong Mining's beneficiation plant and tailings dam have ceased operations. The ore mined by the company's subsidiaries was all processed through Xiangrong Mining's beneficiation plant to produce zinc concentrates. If the subsequent remediation measures or rectification progress for Xiangrong Mining's tailings dam is slow, or if the renewal procedures for the Safety Production Permit cannot be completed smoothly, it will adversely affect the company's self-produced raw materials (primarily zinc concentrates).
32 mins ago
China's Galvanized Sheet Market Slows as Off-Season Hits, Production and Orders Decline
1 hour ago
China's Galvanized Sheet Market Slows as Off-Season Hits, Production and Orders Decline
Read More
China's Galvanized Sheet Market Slows as Off-Season Hits, Production and Orders Decline
China's Galvanized Sheet Market Slows as Off-Season Hits, Production and Orders Decline
[Galvanized Sheet Market] According to SMM, as the consumption off-season arrived, domestic trade orders for galvanized sheet in China weakened notably, dragging down production at domestic galvanized sheet mills, with overall market operating rates declining MoM.
1 hour ago
Zinc Mine in Southwest China Sees Over 1,000 mt Drop in Concentrate Output Due to Unstable Production
1 hour ago
Zinc Mine in Southwest China Sees Over 1,000 mt Drop in Concentrate Output Due to Unstable Production
Read More
Zinc Mine in Southwest China Sees Over 1,000 mt Drop in Concentrate Output Due to Unstable Production
Zinc Mine in Southwest China Sees Over 1,000 mt Drop in Concentrate Output Due to Unstable Production
[Zinc Concentrates Production Information] According to SMM, a zinc mine in Southwest China experienced unstable production, with recent zinc concentrate output declining by over 1,000 mt in metal content from normal levels. SMM will continue to track subsequent performance.
1 hour ago