The recent trend of zinc prices is still greatly affected by the expectation of interest rate cuts by the Federal Reserve under the background of inflation and funds. That, combined with the fundamentals, kept zinc prices at a high level. The logic of ore shortage remains unchanged, and domestic and imported zinc concentrate TCs are declining. Domestic zinc concentrate TCs in some regions have fallen below 3,000 yuan/mt with metal content. The SHFE/LME price ratio is low, and the quotes for spot cargoes at ports are low. There are not many transactions as traders are less willing to sell at low prices. At the same time, although there are environmental protection inspections in Hunan, Yunnan and other places, according to surveys, they mainly restricted the production of secondary zinc oxide and zinc roasted sand, and had little impact on zinc smelting. Smelters still maintain normal production. It is expected that the shortage of ore will unlikely alleviate quickly in the short term. In terms of downstream consumption, with the rise in zinc prices and the impact of environmental protection inspections, the operating rate of galvanised and die-cast zinc alloys has declined, and the spot premium has also continued to be low. But there has not been a significant accumulation of inventories. At the same time, a series of fiscal policies for real estate and infrastructure have been frequently introduced. With the support of policy, the market is betting on an improvement in future consumption, which still supports zinc prices.
According to the model, the price range of SMM #0 zinc ingot is [23,185, 24,775], with an average of 23,940. The unit is yuan/mt. The extreme price range is [22,570, 25,390], the normal price range is [22,980, 24,980], and the conservative price range is [23,390, 24,570]. Prices will consolidate at highs. Prices will obtain support in the range of [22,980, 23,390] and meet resistance in the range of [24,570, 24,980].
On the whole, the fundamentals still support zinc prices, and with the support of macroeconomic policies, it is expected that zinc prices may continue to rise.
LME zinc is expected to trade between $2,900-3,120/mt.
The SHFE 2407 zinc contract prices are expected to move between 23,390-24,570 yuan/mt this week.
Spot discounts are expected to stand at 130-80 yuan/mt against the SHFE 2406 zinc contract.
