Price Trend
According to the monitoring data of business associations, zinc ingot stocks in Shanghai futures market have soared recently, and zinc supply has risen. Affected by this, domestic zinc prices have fallen sharply and continued to fall sharply in June. As of June 17, the price of zinc was 20840.00 yuan/ton, down 1.93% from 21250.00 yuan/ton at the beginning of the month. Zinc prices fell 14.63% over the same period last year. Overall, in June, zinc market supply growth demand is limited, zinc market is negative.
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II. Market Trend Analysis
As can be seen from the chart, the inventory of zinc ingots in LME market fell slightly in June, the supply of zinc ingots in the global zinc market was basically stable, while the demand remained unchanged, and the price of zinc was insufficient; the stock of zinc ingots in Shanghai futures market rose sharply, the supply of zinc in domestic market rose sharply, and the price of zinc was obviously short. Without a big change in the demand of domestic zinc market, the supply rose sharply dragged down the price of zinc. The international zinc price has fallen sharply, and the downward pressure is greater.
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. It is expected that the demand for zinc ingots in automotive and household appliances industries will rise sharply in the future, and the demand of zinc market will rise in the future, which will benefit the price of zinc obviously. However, the impact of policies and regulations has a certain lag, and the momentum of zinc market’s rise in the short term is insufficient.
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Zinc production capacity:
Data released by the International Lead and Zinc Research Organization predict that China, the world’s largest producer of zinc, will increase production by 5.3% this year and refined zinc production by 3.6%. But according to the data, the actual output of refined zinc in China dropped by 0.67% in the first four months of this year. The main reason for the decline in production is that some large factories are relocated due to environmental protection problems, which is related to the sudden overhaul of smelters, but not to small zinc smelters. With the weakening of environmental protection and relocation in the future, zinc production is bound to rebound, and domestic zinc production capacity is expected to be released in the second half of the year.
Statistics of automobile sales
On June 12, the China Automobile Industry Association (hereinafter referred to as the “China Automobile Association”) released data showing that in May 2019, domestic automobile sales completed 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
Bai Jiaxin, an analyst with business associations, believes that the stock of zinc ingots in Shanghai futures market has risen sharply and the supply of zinc in China is abundant, but zinc price has a favorable negative effect, and the demand of zinc market is slightly inadequate due to the continuous decline in automobile sales. The pressure of zinc market’s decline remains. However, with the introduction of the National Implementation Plan for Promoting the Upgrading and Upgrading of Key Consumer Goods (2019-2020), It stimulates consumption and has a better demand for zinc in the future. There is space for zinc in the future. However, due to the lagging influence of policies and regulations, the outbreak point of zinc demand rise or the lack of momentum for short-term zinc price rise in the second half of the year. It is expected that the fluctuation of zinc price will fall in June, and the downward trend will be alleviated or warmed up at the end of June.