August zinc price fluctuated at a high level

In August, zinc prices fluctuated slightly, and the zinc market fluctuated at a high level. As of August 31, the zinc price was 22,776.67 yuan/ton, an increase of 0.18% from the 22,736.67 yuan/ton zinc price on August 1. The zinc price rebounded in August.

2021 Commodity Supply and Demand Index BCI

In August 2021, the Business Society's Commodity Supply and Demand Index (BCI) was 0.07, with an average increase of 1.72%, reflecting the expansion of the manufacturing economy in August compared with the previous month, and the economy was operating steadily. BCI has been positive for 16 consecutive months, the overall trend of bulk commodities is bullish, zinc is an important basic non-ferrous product, and the zinc market has been fully supported by the rise.

Nonferrous Industry Index

On August 31, the non-ferrous index was 1203 points, an increase of 10 points from yesterday, setting a new historical high in the cycle, and an increase of 98.19% from the lowest point of 607 points on November 24, 2015. (Note: Period refers to 2011-12-01 to present). The non-ferrous industry index hit a record high, and the non-ferrous industry has a strong upward momentum. The zinc market follows the rise of the non-ferrous industry, and the zinc price has a greater momentum.

August LME market zinc inventory

In August, zinc stocks in the LME market declined, the global zinc market supply decreased and demand was strong. The rise in zinc ingots was adequately supported, and zinc prices rose with greater momentum.

August Shanghai futures market zinc inventory

According to statistics from the Shanghai Futures Market, the zinc ingot inventory in the Shanghai market increased sharply in August, but compared with 20 years, the inventory fell sharply, and the inventory was reduced by 30%. In August, the domestic zinc inventory increased, but the inventory was still relatively tight. The domestic zinc market supply increased, and the zinc market supply was basically sufficient.

The country's three-time storage regulation

In order to ensure the supply and stable price of bulk commodities, the National Development and Reform Commission and the State Bureau of Grain and Material Reserves decided to put in the national reserve zinc in batches. Following the release of 30,000 tons of national reserves of zinc on July 5 and the second batch of 50,000 tons of national reserves of zinc on July 29, the National Material Reserve Regulation Center announced the release of the third batch of national reserves of zinc in 2021. 50,000 tons of national reserves of zinc will be put in. The open auction time is September 1st. Reserve zinc has been put into the market, and the supply of zinc market has increased, restraining the rise of zinc prices, and increasing the pressure on zinc prices to fall.

Cumulative electricity curtailment, "carbon neutrality" double restriction on zinc ingot supply

The domestic supply of zinc ingots this year fell short of market expectations. Since May, multiple power cuts in various parts of the country have affected the output of zinc ingots. The national carbon emission trading opened on July 16, 2021, has accelerated the pace of carbon neutralization of domestic enterprises, and the production of power plants has been limited. Expected electricity prices to rise , The rising cost of electrolytic zinc limits the output of zinc ingots. Zinc smelting and processing fees have risen, and zinc smelting companies are becoming more enthusiastic about starting operations. However, under the dual impact of power curtailment and "carbon neutrality", zinc smelting companies have little room to start operations, and the expected growth of zinc supply in the zinc market is limited. In the future, domestic zinc mines are about to enter a seasonal reduction and shutdown cycle. The reduction in zinc mine supply, in addition to the heating season in the north, and "carbon neutral" energy consumption issues will all affect the output of smelters. Generally speaking, the supply of zinc in the zinc market is tight.

Desire-side purchasing intention is sluggish

The overall galvanizing enterprises have relatively low willingness to start operations, and the main focus is to remove the pre-stocks. The inventory of finished products of galvanized enterprises is high, the willingness to start work has declined, and the willingness to purchase has declined; affected by the epidemic, shipping containers are tight, port efficiency has decreased, and zinc alloy terminal exports have been blocked, resulting in a backlog of some finished products and a decline in overall downstream demand.

Overview and outlook

In the continuously rising bulk commodity environment, the non-ferrous metals industry has seen a particularly obvious upward trend, which has driven the zinc market to rise. However, the country put in reserves of zinc three times, which restrained the increase in zinc prices and stabilized prices. The zinc price was relatively stable in August, which is precisely the state's regulation and control. In terms of market outlook, the dual impact of limited electricity on the supply side and carbon neutrality in the zinc market is expected to reduce supply, while downstream customers on the demand side have declining purchase willingness and insufficient demand. In the case of weak supply and demand, the zinc market still maintains a tight balance between supply and demand. With the arrival of Golden Nine and Silver Ten, the national zinc reserves are in place at the same time, and supply and demand have always maintained a tight balance. It is expected that the zinc price range will fluctuate and adjust in the future, and the overall price will rise slightly.

Related listed companies: Zhongjin Lingnan (000060), Chihong Zinc Germanium (600497).

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