Considering the positive macro sentiment, zinc prices are expected to fluctuate at highs

Forecast: Before the holiday, market sentiment was high. Macroeconomically, domestic policies intensified, boosting real estate and consumption, leading to a surge in the stock market and a rise in metal prices. Fundamentals side, Teck's Trail zinc smelter, with an annual capacity of 300,000 mt, was partially shut down due to a fire, with a quarter of its zinc production halted and recovery time uncertain. Coupled with rising overseas electricity costs and low TC, H2 smelter profits were squeezed, limiting further production increases. However, weak overseas consumption throughout the year resulted in LME inventory remaining at a high of around 250,000 mt. In China, October TC negotiations were mostly settled. Although some smelters expected TC to rise, domestic ore supply was limited, port inventory was low, and besides some northern smelters, there was an expectation of increased production in Sichuan and Hunan's recycled zinc plants. Overall production might exceed 500,000 mt, increasing demand for ore, but TC faced resistance in rising, remaining largely stable. Currently, prices have risen above 24,000 yuan/mt, with mine profits reaching around 8,000 yuan/mt (metal content). If profits continue, mines might voluntarily reduce prices and increase production, potentially suppressing prices. On the consumption side, although various policy measures were intensified, actual implementation required time, and according to the SMM survey, companies had varying degrees of shutdown during the National Day holiday, limiting improvements in the consumption peak season. Overall, considering the positive macro sentiment, zinc prices are expected to fluctuate at highs, with caution needed for overseas macro disturbances during the National Day holiday.