The price of zinc first rose and then fell in October

The zinc price trend in October is divided into two stages: after the National Day to October 18, the zinc price surged. As of October 18, the zinc price was quoted at 27,796 yuan/ton. The zinc price was in the cycle (cycle refers to 2011-09-01). To date), the price of zinc has increased by 22.52% compared to the beginning of October (October 1) by RMB 2,2686.00 per ton, and the price of zinc has fallen sharply. As of October 31, the price of zinc has been RMB 2,3646.00 per ton, compared with that on October 18. The price of zinc in Japan fell by 14.93%. Stimulated by news such as production cuts in Europe, zinc prices soared in the short-term. However, with the country’s macro-control, zinc prices fell rapidly, and short-term stimulus failed to support long-term increases in zinc prices.

October power ration remains unchanged

In late September, Guangdong, Shandong, Qinghai, Ningxia, Yunnan, Guangxi, Hunan, Anhui, Sichuan, Henan, Chongqing, Inner Mongolia and other places successively issued notices on power curtailment or peak-shifting power consumption. During the National Day, the three provinces of Guangxi, Yunnan, and Hunan, where the electricity curtailment was severe in September, were not eased. The electricity curtailment in Jiangsu and Zhejiang was increased, and some manufacturers were notified to start four holidays and three holidays. After the October holiday, the output of some power-cut companies that stopped production has recovered, and the supply in the zinc market has recovered to some extent. The overall power-cutting effect on the supply shortage in the zinc market remains unchanged. Concentrated purchases by downstream customers after the holiday also stimulated the rise in zinc prices, and zinc prices rose sharply after the holiday.

European smelter cuts production

According to foreign news on October 13, Nyrstar said that with the substantial increase in electricity costs and carbon emissions-related costs, it is no longer economically feasible to run the factory at full capacity. It will reduce the zinc output of its three European smelters by 50% from the 13th.

Following Trafigura Group’s 50% reduction in production, on October 16, Glencore announced that it would conduct staggered production at its three zinc smelters in Europe, Germany, Spain, and Italy, and said that this was mainly affected by soaring energy costs. Many European zinc smelting companies have reduced production or staggered production, which has reduced the supply expected in the global zinc market, aggravated the supply shortage in the global zinc market, and prompted a surge in zinc prices.

In October, China's manufacturing purchasing managers' index fell

In October, China’s Manufacturing Purchasing Managers’ Index (PMI) was 49.2%, a decrease of 0.4 percentage points from the previous month, and continued to be below the threshold. The manufacturing boom has weakened. Manufacturing production has slowed down, and domestic zinc market demand has fallen, and there is insufficient support for zinc prices to rise in the future.

National macro-control "guarantee supply and stabilize prices"

According to the WeChat official account of the National Development and Reform Commission, on the afternoon of October 19, the responsible comrades of the National Development and Reform Commission hosted a symposium on key coal, power, oil and gas transportation companies to ensure supply and price stabilization. The meeting put forward clear requirements for the next step in ensuring supply and price stabilization. The National Development and Reform Commission will make full use of all necessary means stipulated in the "Price Law" to study specific measures to intervene in coal prices, promote the return of coal prices to a reasonable range, promote the return of the coal market to rationality, and focus on combating price bidding and hoarding to ensure commodity prices. Stablize. National macro-control has focused on cracking down on price drive-ups. The increase in zinc prices has become more rational. Soaring zinc prices cannot reflect market supply and demand, and zinc prices have fallen from a high level; cracking down on hoarding, social zinc inventories have entered the market in large quantities, zinc market supply has increased, and zinc market downward pressure has increased. Big.

Non-ferrous metals index fell

In October, the non-ferrous index fell rapidly after rising slightly in October and hitting a record high. On October 18, the non-ferrous index hit a new historical high (note: the cycle refers to 2011-12-01 to present). After that, the non-ferrous index plummeted. The non-ferrous index fell 11.31% on October 30 compared with the non-ferrous index on October 18, compared with 19 On the 1st, the non-ferrous index fell 8.79%. The non-ferrous index fell sharply in October, and the non-ferrous metal sector performed poorly, which dragged down the zinc market and increased the downward pressure on zinc prices.

The fourth time the country dumped reserves

According to the No. 2 Announcement of the State Bureau of Grain and Material Reserves in 2021, it was decided to start the release of the fourth batch of 2021 national zinc reserves on October 9, and the fourth batch of sales totaled 50,000 tons. The introduction of the fourth batch of reserve zinc into the market has eased the supply shortage in the zinc market to a certain extent.

Shanghai Futures Exchange Futures Warehouse Receipt

In October, the total zinc inventory of the Shanghai Futures Exchange rose sharply. As of October 29, the Shanghai futures market had 74,842 tons of zinc ingot stocks and 15,759 tons of zinc ingot futures warrants, a sharp increase from the 54750 tons of zinc stocks and 9,536 tons of futures warrants at the end of September. The inventory of zinc ingots increased sharply, the supply of zinc market increased, and the rising price of zinc was insufficient to support the downward pressure.

Market overview and outlook

In October, the zinc market rose and fell sharply, and the market fluctuated. Such turbulent market has been rare in the zinc market over the years. The reason why the zinc market appeared in such a market in October was mainly due to the weak supply and demand in the zinc market in October, and the stimulus of the European production cut news intensified the worry of supply shortage. With the intervention of national macro-control, the market returned to rationality and zinc prices fell rapidly. . From the perspective of supply and demand, although European production cuts have reduced the supply of zinc in the zinc market, the national dumping of reserves and the introduction of social zinc stocks into the market have made up for the shortage of supply in the zinc market; and the decline in production and manufacturing in October, the demand for zinc in the zinc market has declined significantly in October , Insufficient zinc price support. Generally speaking, it is difficult to solve the reduction of zinc market supply. State dumping of reserves and social inventories can only make up for the short-term zinc market supply gap, and the supply gap in the market outlook may further increase. Due to the impact of limited electricity, manufacturing production has decreased, and zinc market demand has declined, but this decline may not last. The zinc market still has rigid demand and there is limited room for zinc prices to fall. In terms of market outlook, both supply and demand in the zinc market are weak, but demand is expected to pick up slowly, and the potential for supply increase is limited. Zinc prices are expected to fluctuate in the future.

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

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