Sweden's central bank lowered its key interest rate for the first time in more than eight years. The intensified conflict between Palestine and Israel may drive up commodity prices again. In China, Hangzhou has completely abolished its real estate purchase restriction policy. The macroeconomic front still provides support for zinc prices. In terms of fundamentals, the Kipushi mine is expected to be successfully put into production in the second quarter of this year, and the planned output increase will be realised. However, at the same time, overseas mines such as Antamina and Neves Corvo are still affected by lower grade of raw ore. The Nordenham smelter is in normal production. This can affect the inflows of zinc concentrate into the domestic market against overseas ore supply tightness.
According to the data of zinc concentrate shipments leaving ports: the increase in the arrivals of zinc ore will be limited. If the inflows of imported ore remain low and the increase in domestic ore supply is limited, the shortage of raw material supply can hardly be alleviated. In addition, the number of days of raw material inventory at smelters has dropped to 17.12 days, which is at a historical low. In April 2024, due to the impact of maintenance and lower TCs, domestic refined zinc output fell by 20,900 mt month-on-month to 504,600 mt. In May, due to the resumption after maintenance, rising zinc prices and high prices of minor metals, smelters profits were restored. At the same time, new production capacity was released. Output is expected to increase to 531,400 mt. It is expected that under the background of high prices in June, smelters may continue to maintain normal production. The shortage of zinc concentrate may ease. Downstream consumption has improved slightly after the Labour Day holiday. Social inventory has shown a slight destocking in May.
According to the model, the price range of SMM #0 zinc ingot is [22,290, 23,945], with an average of 23,140. The unit is yuan/mt. The extreme price range is [21,780, 24,450], the normal price range is [22,120, 24,110], and the conservative price range is [22,460, 23,780]. Prices will consolidate at highs in the week of May 13. Prices will obtain support in the range of [22,120, 22,460] and meet resistance in the range of [23,780, 24,110].
On the whole, under the current macro support, there are no major negative factors in the fundamentals, bull funds are relatively strong, and zinc prices may move rangebound at highs.
