SMM, January 3:
Macro side, the high inflation rate in the US has led the market to expect that the US Fed may slow down the pace of interest rate cuts next year. Meanwhile, the new president is expected to introduce policies such as easing corporate regulations, tax cuts, raising tariffs, and cracking down on illegal immigration to promote economic growth. The US dollar strengthened, putting pressure on zinc prices. Fundamentals side, overseas, the LME cash-3M discount widened to over $24/mt, LME inventory decreased by more than 10,000 mt during the week, but the ratio of cancelled warrants fell to 26.76%, with overseas capital still showing relatively high favor. Domestically, according to customs data for November, domestic zinc concentrate imports increased to over 450,000 mt, while inventory at seven domestic ports rose to around 300,000 mt, increasing market circulation. Smelters' raw material inventory rose to over 27 days, and the self pick-up price of port zinc concentrates increased to around 2,700 yuan/mt (metal content). Meanwhile, mainstream import TC also rose to -$20/dmt, and domestic processing fees were partially raised to around 2,000 yuan/mt (metal content), showing a significant overall increase in processing fees. Additionally, according to SMM communication, refined zinc production in December was nearly 520,000 mt, with the MoM increase falling short of expectations. January production is expected to increase to over 530,000 mt. From the spot market perspective, imported zinc ingots have recently flowed into ports in larger quantities, and with the new long-term contract execution cycle, the tightness in spot supply has eased. Meanwhile, as year-end approaches, corporate orders have slightly weakened, coupled with active low-price restocking by downstream sectors earlier. Weekly procurement has been relatively cautious, and SMM social inventory ended its previous continuous decline, increasing by 2,000 mt WoW to 64,500 mt, weakening inventory support for prices. Overall, weak macro sentiment combined with reduced supply-side support suggests that zinc prices may primarily undergo weak consolidation.
(The above information is based on market communication and comprehensive evaluation by the SMM research team. The information provided herein is for reference only and does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.)
