SHANGHAI, Sep 21 (SMM) - SHFE zinc weakened and closed down 0.83% on September 20. At present, the zinc market demand is expected to be strong, and downstream demand is still resilient. Social inventory accumulation is limited. However, the positive policy has been priced in, and the supply of refined zinc is expected to increase. Therefore, futures prices have insufficient motivation to continue to rise.
As the TCs for imported zinc concentrates continue to fall, the TCs for domestic zinc concentrates have also been reduced. After the smelter was overhauled, refined zinc output has recovered. Regarding the supply side, Yide Futures said that with winter storage approaching in the near future, refineries have begun to purchase raw materials for storage. The zinc concentrate TCs have dropped significantly. The lack of sufficient zinc concentrate is a consensus of markets, and output of smelters in Q4 may be reduced. In addition, due to the current low zinc prices and high TCs, the market frequently reports news of production reductions at overseas zinc mines.
According to recent agency statistics, the domestic zinc ingot social inventory has increased slightly from the low level, but the extent is limited, indicating that downstream demand is still resilient. However, the recent trading has been relatively quiet. Guomao Futures said that domestic zinc ingot social inventory is at a lowest level in the past five years. On the consumer side, the capacity utilization rate last week was 66.56%, an increase of 0.89% from the previous week. The galvanizing capacity utilization rate has increased for two consecutive weeks, and the resilience of downstream consumption remains.
