Zinc prices are expected to hover at highs

Zinc prices hovered at highs this week. From the perspective of fund positions, there is still bullish sentiment towards zinc prices, mainly due to the lack of improvement in the tight supply of mines, continued decline in TCs, and increased losses for smelters. According to an SMM survey, in September, production cuts and maintenance increased at Chihong, Hanzhong, Shaanxi Zinc, and Bazi, while production at Western Mining and Sihuan might increase. Overall, September production is expected to weaken slightly. Domestic supply reduction, combined with the closure of the import window, led to a decrease in imported zinc ingots, and social inventory continued to decline. Meanwhile, with the stabilization of ferrous metals prices and the end of high-temperature and rainy weather, there is an expectation of improvement in downstream consumption, boosting confidence among bulls. However, current consumption performance shows limited overall improvement, and the reduction in smelter output may fall short of expectations. Combined with persistent economic instability, this supports the bears, hindering zinc price increases. Considering the macro support from expected interest rate cuts and low zinc ingot production, zinc prices are expected to hover at highs.