Price Trend

Zinc prices continued to tumble in August, but the decline slowed down, according to data monitoring from business associations. As of August 30, the price of zinc was 19026.67 yuan/ton, down 2.73% from 19560.00 yuan/ton at the beginning of the month, and 12.53% from the same period last year.

II. Market Trend Analysis

According to the statistics of business associations, the performance of zinc market in August was not good, the decline of zinc price continued in the early period, but the decline slowed down, and the pressure of zinc market fell slowly, but the momentum of increase was insufficient. It is expected that the small fluctuation of zinc market in the future will be the main reason.

In July 2019, the domestic zinc production rose sharply, and the domestic zinc production increased sharply. The insufficient supply in the domestic zinc market gradually turned to excess supply. As of July 2019, zinc production has increased by 6.1%. Oversupply of zinc is evident in Zinc City. Zinc prices in the future are not optimistic.

High zinc processing cost

According to statistics, on August 30, the processing fee of refined zinc in China was between 6050 and 6600 yuan/ton. In 2019, the processing fee of zinc was obviously higher, which stimulated zinc smelting enterprises to increase start-up, increased supply of zinc production, and increased the risk of excess supply in the future.

Downstream demand

Data from the National Bureau of Statistics show that real estate investment, sales, funds and other data show a downward trend from January to July. The investment in real estate development increased by 10.6% year on year, and the growth rate dropped by 0.3 percentage points compared with the first half of the year; the new housing construction area of real estate development enterprises increased by 9.5% and the growth rate dropped by 0.6 percentage points; the capital in place of real estate development enterprises increased by 7.0%, and the growth rate fell by 0.2 percentage points; the sales area of commercial housing was 887.83 million square meters, down by 1.6 percentage points over the same period of last year. 3%; the area for sale of commercial housing is 498.76 million square meters, which is 2.86 million square meters less than that at the end of June, down 8.4% from the same period last year; the area for sale has been reduced for seven consecutive months, with the area for sale falling 500 million square meters for the first time in six years. The overall decline in real estate data, the demand for non-ferrous metals has declined significantly, and the demand for zinc has declined. In July, car sales fell by 2.6%, showing a drop from a positive growth of 17.2% to a decline of 2.6%. Because of the change of emission standards in June, many manufacturers and distributors took many promotional activities in June, which led to a 17.2% increase in automobile sales in that month. The automobile consumption in the future was overdrawn by the consumption front, and the demand for zinc in the automobile industry declined.

In August, zinc stocks in Shanghai futures market fell sharply. Especially since late August, zinc stocks have declined sharply. The decline in inventory and the decrease in supply have provided some basic support for the future revival of zinc prices. Traders’data show that the activity of Zinc has declined sharply since mid-August, while it has rebounded since late August, but the overall activity of Zinc is general, and Zinc’s expectation of zinc price rise is low.

3. Prospects for the Future Market

Business analyst Bai Jiaxin believes: stimulated by the high processing cost of zinc concentrate, domestic zinc production has increased month by month, and zinc market has gradually changed from short supply to over demand; on the downstream demand side, the trend of real estate in the third quarter is down, which is bad for zinc market, the automobile industry has not seen a bad year by year, and the demand for zinc market is declining year by year. Overall demand for zinc is bearish. Although the zinc stock in Shanghai futures market declined in August and the supply of zinc declined, which is good for the zinc market, we can see from the transaction activity that the market is still not optimistic about the rise of zinc market, but because of the consideration of zinc ingot cost and profit, zinc price has little room to fall. In summary, the supply of zinc in the future is growing steadily, the demand of zinc is not good, the driving force of zinc price rise in the future is insufficient, the pressure of decline is weakened, and the price of zinc in the future is expected to decline slightly, but there is no upward trend in zinc market in the near future.