Zinc price fell in shock in December

According to the data monitoring of SunSirs, the zinc price was 23,974 RMB/ton as of December 31, down 4.07% from 24,992 RMB/ton on December 1 at the beginning of the month. The demand of zinc market was less than expected, and the zinc price fell in shock in December.

Domestic PMI fell continuously, and the demand of zinc market was lower than expected

In December, the manufacturing purchasing managers' index (PMI) was 47.0%, down 1.0 percentage points from the previous month, lower than the critical point. The manufacturing industry's production and operation prosperity level fell back from the previous month. PMI had been lower than 50% for three consecutive months. Affected by the impact of the epidemic situation and other factors, China's purchasing manager index had declined from last month. With the gradual improvement of the epidemic situation, the market trend is expected to recover in the later period.

Supply and demand factors in zinc market

In terms of supply, the cold wave is coming, domestic electricity is occupying industrial electricity, European zinc smelting may be affected by production reduction, and zinc supply is expected to shrink. All EU countries agreed that the price ceiling of natural gas is set at 180 euros/megawatt hour, which is far lower than the price proposed by the EU last month. Natural gas prices fell, zinc smelting costs fell, zinc smelting output is expected to increase, and European zinc supply is expected to increase.

On the demand side, the Federal Reserve released a hawkish signal while reducing the rate increase. The Federal Reserve decided to continue to raise interest rates. The optimistic expectation of the market was frustrated, and the pessimism of economic recession spread. The domestic prevention and control measures have changed, the macroeconomic recovery has not been as expected, the domestic factory output has slowed down, retail sales continue to decline, the supply and demand of zinc market have not met expectations, the impact of the epidemic has affected part of the employment, most enterprises plan to have holidays in advance, the off-season effect may be greater than in previous years, and the downward pressure on zinc prices has increased.

Market outlook

According to the data analysts of SunSirs, the cold wave was coming, industrial power consumption was decreasing, and zinc smelting output was decreasing. With the reduction of zinc smelting costs in Europe, the supply of zinc was picking up. On the demand side, the Federal Reserve still raised interest rates, and the market pessimism spread. The domestic market recovery was less than expected, and the demand for zinc was poor. On the whole, the supply of zinc was expected to increase, the demand was less than expected, and the price of zinc dropped in shock. In the future, the supply of zinc is expected to recover, and the zinc price is expected to rise slightly in shock.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com