LME zinc prices to continue outperforming SHFE zinc 

SMM understood that Yunnan implemented power rationing by around 10%, which mainly affected Honghe Prefecture and surrounding enterprises. However, considering adequate hydro-power supply in Yunnan, the total affected output within the month is expected to be only around 1,100 mt. In October, except for the maintenance at some smelters in Hunan and Gansu, other smelters basically resumed normal production. SMM refined zinc output rose sharply to 604,600 mt. In November, affected by routine maintenance at smelters and power rationing in Yunnan, the overall output is expected to decrease slightly to 598,600 mt. A combination of the off-season in north China, the sustained impact from environmental protection and decreased outdoor construction amid adverse weather will prevent galvanised consumption from improving significantly. Spot premiums weakened and social inventories increased amid high SHFE zinc prices and continued influx of imported zinc ingots including SMC, KZ and AZ brands. Considering that TCs have continued to decline in the fourth quarter and inventories still hover at low levels, zinc prices are expected to remain range-bound, with LME zinc prices continuing to outperform SHFE zinc prices.