[SMM analysis] the inventory of zinc ingots in Guangdong continues to decline and is expected to continue to be de-stocked.

SMM5月17日讯：广东锌锭库存自三月中旬上破十万吨后便一路走低，虽然从去库时间来看，与国内其他地区保持一致，但当前广东锌锭库存仅有6万吨，库存自高位几近减半，对于广东锌锭库存大幅下降，我们需要从供需两方面进行分析。

"Click to view the SMM zinc industry chain database

In terms of storage, the arrival volume of zinc ingots in Guangdong has continued to decline since a large number of smelters concentrated in February and March. We believe that as the spot price of zinc ingots in Guangdong has narrowed significantly compared with the discount of futures contracts in that month, and once turned to a rising state, the demand for smelters to deliver goods to Guangdong delivery warehouse for futures delivery has obviously weakened. After the highway is free, in order to reduce the cost and increase the income, after picking up the goods in the smelter area, the volume of goods sent directly downstream of the automobile transportation increases, resulting in a decrease in the warehouse volume; the spot price difference between Guangdong and East China is maintained at more than 100 yuan, and the smelter changes the delivery plan, resulting in a significant increase in the volume of goods sent to East China, which correspondingly reduces shipments to Guangdong. The volume of goods purchased by enterprises in Fujian, Hunan and other places in Guangdong has increased, and some of the sources of goods have been picked up directly from the smelter to the factory, diverting the supply of goods from the Guangdong market and affecting the arrival of goods to a certain extent.

In terms of depot release, with the continuous resumption of production downstream, the output of zinc ingots in Guangdong increased significantly compared with the previous period. Driven by the rush to order downstream and a sharp drop in zinc prices to replenish the inventory of raw material zinc, the output increased significantly in March, while in April, the price gap between Shanghai, Guangdong and Tianjin widened, the price difference between Shanghai and Guangdong once widened to around 200 yuan / ton, and the price difference between Tianjin and Guangdong exceeded 300 yuan / ton. In the case of a reduction in shipping charges, The price difference far exceeded the shipping cost. Traders and downstream purchased zinc ingots from Guangdong, and the quantity sent to Shanghai, Ningbo and Tianjin increased significantly, pushing the output of zinc ingots out of Guangdong warehouse to a higher level.

To sum up, in the case of a sharp decline in storage volume and an increase in warehouse output, Guangdong is going to the warehouse faster, and we expect that under the current situation that the smelter overhaul and the spot transaction price in Guangdong is lower than that in eastern China, the volume of goods sent by the smelter to Guangdong is still difficult to increase. Although the downstream demand for die-casting zinc alloy is low, the demand for galvanizing and batteries is OK to support the overall demand, and the Guangdong market is expected to maintain a destocking state in the short term.

"Click to sign up for SMM" 2020 (15th) lead and Zinc Summit

Scan the QR code in the picture to sign up for the lead-zinc summit and fill in the personal information on the last page. The meeting staff will contact you later!