SMM June zinc price review and July forecast

Price: Zinc market has seen weak supply and demand recently. Despite the start of operations at the Kipushi mine overseas and the Huoshaoyun mine domestically, short-term relief from mine shortages is unlikely, due to challenges like quality issues, shipping schedules, overseas smelter demand, and progress at Huoshaoyun mine. Port self-pickup zinc concentrate TCs have fallen below 2,000 yuan/mt in metal content, with imported zinc concentrate TCs seeing negative figures, and domestic zinc concentrate TCs have dropped to a historical low near 2,000 yuan/mt in metal content. Additionally, due to the ongoing mine shortage and low profitability, domestic smelter production is expected to decrease by nearly 40,000 mt in July. Smelter raw material inventory is down to 16.87 days, and excluding by-products and sulfuric acid, losses are around 1,600 yuan/mt. This mine shortage is directly impacting smelters, perpetuating the weak supply-side trend.

On the consumption side, despite favorable policy expectations from the 20th Third Plenary Session, market response has been subdued. Large-scale bond issuances and trillion yuan investments have not been fully rolled out, and end-user orders remain low. The off-season impact is clearly visible across galvanizing, die-casting, and zinc oxide sectors. Additionally, high temperatures and rainy conditions are hampering outdoor construction, with rebar and HRC data continuing to show weak performance. Exports are further challenged by rising ocean freight costs, fewer ships, and trade barriers, resulting in a generally weak export performance. With supply reductions, the forecasted increase in social inventory to a historical high of 200,000 mt also points to weak consumption. Overall, amid a generally positive macroeconomic sentiment and strong support from raw materials, zinc prices are expected to stay high.