Domestic and overseas data improved in April. The inflation data, the increase in orders for durable goods, the PMI data and the strong employment data all showed the soft landing of the overseas economy and the recovery of China’s domestic manufacturing industry. Meanwhile, due to geopolitics issues, the credit status of the US dollar has been questioned, which has also boosted the prices of non-ferrous metals.

On the fundamentals, the benchmark TC for zinc concentrate in 2024 has been decided, and the imported zinc concentrate TC of $165/dmt is the lowest in three years, indicating that the shortage of ore has not improved. With an increasing number of overseas mines cutting output, the weekly imported zinc concentrate TC was reduced to $50/mt. The domestic zinc concentrate TC was 3,500 yuan/mt with metal content, the lowest in three years. The smelting cost has moved up further. Excluding the by-product income, domestic smelters are basically in a loss-making state. According to the SMM survey, the output of domestic smelters in March was 525,500 mt, an increase of 23,000 mt from the previous month. The output of smelters is expected to decline to 504,300 mt in April due to a combination of maintenance, raw material shortages and low profits. Operating rates across galvanising, die-casting zinc alloy and zinc oxide sectors improved on the back of the improvement of export orders, the "old for new" policy and the rebound in ferrous metals prices. The real estate sector has performed weakly, though. In aggregate, the bullish market sentiment, combined with surging copper and aluminium prices, sent zinc prices rising. Resistance levels are likely 23,000 yuan/mt.