SMM Forecast of Zinc Prices

         The United States PPI monthly rate for February, US Feds interest rate decision on March 16, the annualised new house starts in the United States in February, the eurozone ZEW economic climate index in March, the EU CPI monthly rate for February remain as the market focus. There will be no Chinese economic readings this week. In terms of events, the Fed will announce the interest rate resolutions this Thursday. The Fed Chairman Powell will hold a press conference on monetary policy and the European Central Bank President Lagarde will make a speech.

        For LME zinc, the overseas market needs to concern about the sanctions imposed on Russia by the West and Russia's countermeasures. In addition, the increasing rate hike decided by the Fed meeting in March and the subsequent rate hikes. So it can be predicted that many uncertain events in March will make it harder for zinc transactions. Without assumption of further developments between Europe and Russia, the prices of gas and electricity would still remain strong until the energy issues are solved in Europe. The EU's speeches and the resumption of Nyrstar may be the inflection for the market. On the whole, LME zinc needs to be taken with caution. Fluctuation may occur in short term. LME zinc prices are expected to stand at $3750- 4000/mt.

       For SHFE zinc, as domestic output of refined zinc increased greatly MoM and YoY, the rebound of demand in the north is worthy of more attention in the second half of March. Whether to be bullish or bearish on zinc prices depends on the destocking of zinc ingots in the second half of March comparing with last year. In addition, the domestic zinc concentrate supply and demand needs to be focused. Due to the SHFE/LME zinc price ratio, it still led to serious losses in imported zinc ore. The domestic smelters actively purchased domestic zinc ore. If the price ratio did not improve, some smelters may reduce the production. If follow-up ore supply issues lead to production cuts,, the SHFE/LME price ratio may also have a certain degree of recovery. On the whole, SHFE zinc needs to be taken with caution and are expected to move between 25,000-26,000 yuan/mt. (Risks: demand less than expected; worsening pandemic; overseas geopolitics; Fed's tightening currency beyond expectations, etc.)