Price trend

According to the Commodity Market Analysis System of SunSirs, as of March 31st, the zinc price was 23,354 RMB/ton, a decrease of 0.36% from the zinc price of 23,438 RMB/ton on March 1st. After fluctuating and rising within the range in March, zinc prices fell at the end of the month.

Analysis review

On a macro level, the disruptive effects of US tax policies have weakened compared to before. At the same time, Fed officials have stated that the job market remained relatively stable and that more time was needed to completely eliminate inflation. In this context, the US dollar index was able to maintain its rebound momentum, thereby exerting downward pressure on metal prices.

On the supply side, the zinc ore production was showing a recovery trend compared to the previous period, and there was no clear indication that ore supply expectations will be further disrupted. Against the backdrop of a rebound in processing fees (TC) and accumulation of raw material inventory, the smelting production in February remained at a relatively low level. However, driven by the increase in smelting profits, it is expected that smelting production will significantly increase after March or April. However, the recovery pace of downstream markets after the holiday was relatively slow, coupled with high prices leading to a narrowing of premiums and basis differences.

On the demand side, in the spot market, downstream enterprises had slow progress in resuming production and work, weak consumer performance, and strong market feared of high priced goods. Despite low inventory levels, which have prompted traders to maintain firm prices, the repair of the premium appeared to be difficult. Overall, the consumption of zinc in China is showing a weak trend. From the perspective of the operating rate of primary consumption, several downstream industries of zinc in China, including galvanized sheet, galvanized parts, die cast zinc alloys, and zinc oxide, have experienced a month on month decline in their capacity utilization rates. This indicates that although the market originally expected to enter the peak consumption season, the actual downstream consumption level did not meet this expectation.

Market outlook

In March, a series of positive policy signals were announced during the Two Sessions in China, indicating a significant increase in fiscal spending this year, especially in the main areas of zinc consumption such as infrastructure and new energy, where targeted support measures will be provided. In addition, considering the arrival of the traditional peak consumption season of "gold March and silver April", the subsequent market demand is expected to gradually release, providing upward momentum for zinc prices. Therefore, it is expected that zinc prices will not experience a significant decline in the short term, but will remain within a range of fluctuations.

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