Zinc prices fluctuated at high levels last week. Macroeconomically, the US retail sales in March exceeded expectations, and the market's expectations for the Fed's rate cut were lowered again. In addition, the year-on-year growth of China’s GDP in the first quarter exceeded expectations. Infrastructure construction is expected to increase. But social copper inventory has been slow to fall, reflecting the weakening purchasing power of end-user enterprises under high prices. Before consumption improves significantly, the year-on-year high level of inventory will be the key factor suppressing zinc prices.
The shortage of domestic and overseas ores in the short term will linger. While there has been a small increase in port inventories, most of the inventories were pre-ordered cargoes. Available cargoes are still tight. Smelters, facing a shortage of raw materials and losses, are unlikely to increase output significantly. In the short term, zinc prices will fluctuate at a high level.
The SHFE 2405 zinc contract prices are expected to move between 22,000-23,000 yuan/mt this week.
LME zinc is expected to trade between $2,700-2,900/mt.
Spot discounts are expected to stand at 130-80 yuan/mt against the SHFE 2405 zinc contract.
