Zinc prices expected to fluctuate in a wide range

Expectations of a delayed interest rate cut by the Federal Reserve depressed market optimism. Base metal prices were weighed down, with zinc prices running weakly. From a fundamental point of view, there has been no additional production resumption at overseas mines, and smelters have basically maintained regular production. The contango of LME cash to the three-month contract exceeded $24/mt amid poor overseas consumption. LME zinc prices were running weakly; maintenance and the off-season lowered output at domestic mines in December. Although the refined zinc output of Chinese smelters increased 11,900 mt from the previous month to 590,900 mt in December, output in January is expected to drop by 17,500 mt to 572,400 mt due to factors such as maintenance and environmental protection. Nonetheless, smelters were also actively stocking up on zinc concentrate for production from January to February. Port inventories have changed little, exacerbating the shortage of raw materials for domestic smelters. TCs continued to be weak; with the recent recovery of the SHFE/LME zinc price ratio, the import windows for zinc concentrate and refined zinc have both opened. It is expected that import volumes may increase, and there is limited room for a reduction in the TCs for imported zinc concentrates. There have been inflows of imported zinc ingots from South Korea, Spain and Peru. LME zinc inventory has recently dropped by about 15,000 mt, which are expected to have arrived in China. The supply pressure increased; operating rates fell across galvanising, die-casting, and zinc oxide sectors, and some companies may close earlier for Chinese New Year holidays in January, weighing on zinc prices. However, considering the still low social inventories and cost support of smelters and mines, any decline in zinc prices will be limited. Zinc prices are expected to fluctuate in a wide range.