On the macro front, favorable policies in the domestic real estate sector have re-emerged. This, along with continuous efforts to stabilize the financial market, boosted market optimism and thus causing a general rise in non-ferrous metals prices. Fundamentally, there are no prominent conflicts overseas, and the contango of LME 0-3 remained above $55/mt. LME zinc inventory has fallen to a nearly four-month low of less than 240,000 mt, with a monthly decrease of 17,000 mt. It is possible that some of the inventory is being shipped to China, awaiting the opening of the import window. It is estimated that refined zinc imports in June will be around 30,000 mt. There is nearly 30,000 mt of zinc ingot inventory in bonded areas. If the import opportunity arises in July, the bonded area inventory will first flow into the market. This is expected to impact the reduction in domestic supply caused by smelter production cuts due to ore shortages. Therefore, the reduction in supply in July may not be significant. On the consumption side, traditional off-season and high-temperature rainy weather have weakened end-user orders. This, together with the rise in zinc prices, has weakened downstream consumption, and social inventory has turned to accumulate.
The model predicts that the average price range for SMM 0# zinc ingot from Thursday June 27 to Wednesday July 3 will be [23,165, 24,120] yuan/mt, with an average of 23,630 yuan/mt. The extreme price range is [22,890, 24,360] yuan/mt, the normal price range is [23,070, 24,200] yuan/mt, and the conservative price range is [23,260, 24,040] yuan/mt. Prices are expected to be strong. The support range is [23,070, 23,260] yuan/mt, and the resistance range is [24,040, 24,200] yuan/mt.
In summary, favorable macro environment and news of smelters production cuts have boosted zinc prices. However, poor performance in spot and consumption has limited the upside potential. Further price increases will require additional news stimuli.
The most-traded SHFE zinc contract: 23,200-25,000 yuan/mt;
LME zinc: $2,850-3,050/mt;
Premium over the 2408 contract: -140~-80 yuan/mt.
