SHANGHAI, Apr 17 (SMM) - The market worried that power rationing in Yunnan might cast some impact on zinc smelters. Many smelters in Yunnan such as Luoping Zinc & Electricity carried out routine maintenance last week, while Mengzi Mining and Metallurgy finished the overhaul. The market shall pay attention to the policy issued by the Yunnan government on April 20 to see whether power rationing will intensify.
On the demand side, the galvanising companies maintained normal operation on average orders placed by end users, and they focused on shipping the in-plant inventories of finished products. Downstream companies restocked a small number of raw materials on the sharp fall in zinc prices last week, driving down the domestic zinc supply. Overseas demand, especially in Europe and the US, decreased, resulting in a rapid decline in premiums in the European markets. In the future, the market players need to be cautious about the concentrated delivery of spots. Therefore, the SHFE/LME zinc price ratio is likely to grow further, and the spread between the SHFE front-month and next-month contracts may be maintained in the backwardation structure. Zinc prices will gradually fall.
SHFE zinc prices are expected to fluctuate between 22,000-22,700 yuan/mt this week, and LME zinc prices will be $2,750- 2,950/mt.
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