According to the data monitoring of business associations, the price of zinc rose in September, and the zinc market showed a trend of stopping falling and rising again. As of September 9, the price of zinc was 19260.00 yuan/ton, up 1.23% from 19026.67 yuan/ton at the beginning of the month, and down 11.62% from the same period last year.
II. Market Trend Analysis
Zinc processing fee
Zinc processing fee is the fee charged by the smelter for processing and producing zinc concentrate into zinc ingot. It is the main source of income for the smelter, accounting for 70-80%. As can be seen from the above figure, the processing fee of domestic zinc is maintained at 6050-6600 yuan/metal ton, while that of imported zinc concentrate is 280 dollars/dry ton, which is much higher than that of previous years. Compared with zinc price, zinc processing fee accounts for 32.4%. High processing fee limits the falling space of zinc price. After zinc price, the falling space is limited and the rising pressure is increased.
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Domestic Zinc Production
In 2019, the domestic zinc production increased substantially. From January to July, the domestic zinc production increased by 6.1%, the supply of zinc increased, and the price of zinc fell under pressure.
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 sales area of commercial housing was 887.83 million square meters, down 1.3% from the same period last year; the area for sale of commercial housing was 498.76 million square meters, down 8.4% from the end of June; the sales area decreased for seven consecutive months, and the area for sale dropped 500 million square meters for the first time in six years. The decline of real estate sales data indicates that the demand for non-ferrous metals in the future of the real estate market is declining, the demand for zinc is declining, and the downward pressure of zinc price is increasing.
In July, China’s automobile sales fell by 2.6%, showing a drop from a positive growth of 17.2% to a decline of 2.6%. Automobile sales continued to decline, automotive industry demand for zinc ingots is expected to decline, after the market zinc price rise power is insufficient.
3. Prospects for the Future Market
Bai Jiaxin, an analyst with business associations, thinks that the processing cost of zinc concentrate remains high, the cost of zinc ingots is high, the price of zinc ingots in the future is limited, and the pressure of zinc price rising is increased; at the same time, because of the high processing cost of zinc, the output of zinc ingots is rising, and the supply of zinc in the market is increasing, which has a negative impact on zinc price. Sales of automobile industry declined, demand of zinc market was generally down, and supply of zinc was in excess of demand. In summary, the supply of zinc is in excess of demand, and there is downward pressure in zinc market. However, due to the high processing cost of zinc, the high cost of zinc ingots, the limited space for zinc price to fall, zinc price has a certain upward pressure. The future zinc market has mixed pros and cons. It is expected that zinc prices will fall into a state of sawing in the future, and zinc prices will remain stable.