Downside room of zinc prices will be limited

Overseas zinc inventories continued to be at a high level of over 220,000 mt. Overseas supply increased while consumption remained weak, growing supply pressure. The oversupply of zinc has weighed on zinc prices. On the other hand, TCs continued to fall, and the smelters’ profits have shrunk to around 300 yuan/mt. Buying on dips helped reduced inventories. In addition, environmental disturbances in downstream consumption have reduced, and operating rates at galvanising and die-casting zinc alloy plants have improved slightly, as was reflected in the inventory data of cold-rolling and hot-rolling coil plants. Considering the cost of $2,500/mt at overseas mines and the cost of domestic smelters, any decline in zinc prices will be limited.