Price Trend

According to the monitoring data of business associations, the domestic zinc price fluctuated and fell in June. As of June 30, the price of zinc was 20233.33 yuan/ton, down 4.78% from 21250.00 yuan/ton at the beginning of the month. Zinc prices fell 14.01% over the same period last year.

II. Market Trend Analysis

International Zinc Price:

The volatility of zinc price in LME market in June caused a negative impact on the domestic zinc market, and the domestic zinc price followed the decline. Inventory in zinc market declined, supply in zinc market declined, and zinc market in the future had an upward momentum.

Data statistics:

The report released by the International Lead and Zinc Research Group (ILZSG) shows that the global zinc supply shortage increased to 84,000 tons in April and 48,700 tons in March.

According to a report released by the World Bureau of Metal Statistics (WBMS), the global zinc market was oversupplied by 4,600 tons in January-April 2019, compared with 67,000 tons in the whole year of last year. Global refined zinc production declined by 4% from January to April 2019, and consumption decreased only slightly from the same period last year. Apparent demand in Japan was 177,700 tons, down 2.7% from January to April 2018. Global zinc demand declined by 1,000 tons from January to April 2019. China’s apparent demand is 1969,000 tons, accounting for about 46% of the global total. Unreported inventory changes are not included in consumption statistics. In the first four months of this year, the global supply shortage of zinc increased to 97,000 tons, compared with 53,000 tons in the same period last year.

The data show that the growth of global supply is declining faster than that of demand. Zinc supply shortage is increasing, and the driving force of Zinc market is greater.

Zinc production in 2019

It can be seen from the table that zinc production decreased year on year in 2019, but unlike the continuous decline of zinc production in 18 years, the decline slowed down in 19 years, and zinc production rebounded in May. According to the data released by the International Lead and Zinc Research Organization, zinc production in China was expected to be released in the second half of the year. In 2019, zinc production in China increased by 5.3%, and refined zinc production in the world would also increase by 3.6%. It is expected that zinc production capacity will gradually be released and zinc supply will increase in the future.

Policies and regulations:

On June 6, the State Development and Reform Commission, the Ministry of Ecological Environment and the Ministry of Commerce jointly issued the Implementation Plan for Promoting the Renewal and Upgrading of Key Consumer Goods and Unobstructed Recycling of Resources (2019-2020) (hereinafter referred to as the “Plan”), which takes the structural reform of the supply side as the main line, and focuses on promoting the upgrading of automobile, household appliances and consumer electronics products from four aspects of “consolidation, enhancement, promotion and smoothness”. Promote the recycling of old products. The introduction of the scheme has obvious advantages for automobile and household appliances industries. In the future, the demand for zinc ingots in automotive and household appliances industries will rise sharply, and the demand of zinc market will rise in the future, which will benefit the price of zinc obviously.

Statistics of automobile sales

According to the data released by China Automobile Industry Association (hereinafter referred to as “China Automobile Association”), in May 2019, domestic automobile sales totaled 1913,000 vehicles, down 16.4% from the same period last year. Passenger car sales were 1.511 million, down 17.4% year-on-year. From January to May, automobile sales totaled 10.266 million vehicles, down 13% year-on-year; from January to May, passenger car sales totaled 8.399 million vehicles, down 15.2% year-on-year, a slight increase over January to April. From January to May 2019, car sales declined by 15.8%, 13.77%, 5.2%, 14.6% and 16.4% respectively. China Automobile Association said that due to the downward pressure of macro-economy and the early implementation of the Sixth Emission Standard in some regions, automobile production and sales are still at a low level. It is expected that in the second half of the year, with the increasing number of car models meeting the Sixth National Standard and the continuing effect of a series of policy measures such as tax reduction and fee reduction, the car market will all improve. Automobile sales fell, demand for zinc fell, domestic zinc price shocks fell, and zinc prices were negative in the future.

3. Prospects for the Future Market

Business analyst Bai Jiaxin believes that: in June, the zinc market shocks adjustment, overall small shocks fell. From the international market point of view, the fluctuation of international zinc price has fallen, which has a negative impact on zinc market and a negative impact on zinc ingot inventory in the international market. In the domestic market, the stock of zinc ingot in Shanghai futures market has risen, the supply of domestic zinc market is sufficient, and the price of zinc has a negative impact on zinc. Consumption upgrading policy, stimulating consumption, has a better demand for zinc market in the future, automobile sales continue to decline, zinc demand in the future market has declined. The market is bullish. Generally speaking, zinc market has mixed positive and negative results. In the future, demand of zinc market has warmed up. At the same time, zinc production has increased, supply of zinc has increased. In the second half of the year, the supply and demand of zinc may be booming, and the overall zinc price may increase. However, because the growth of demand in zinc city mainly comes from government policy stimulus, the macroeconomic environment has not changed fundamentally, the demand of zinc city brings more uncertainty, whether the demand of zinc city can meet expectations, whether the supply and demand of zinc city in the future can keep balance, and the uncertainty leads to the fluctuation of zinc city in the future. Overall, however, in July, the zinc market was better than the bad. It is expected that the zinc price will adjust broadly in July.