Shouchuang Futures: Zinc supply recovery imminent, zinc prices under downward pressure

Geopolitical conflicts have limited impact on zinc. However, as winter gradually comes to an end, mine supply is expected to resume and rebound. Last night, zinc prices weakened and dipped; today, zinc prices opened sharply lower, falling more than 2% and briefly edging close to 24,000 yuan. The key level received support, leading to a fast rebound. It is reported that the processing fee for domestically produced 50% zinc concentrate has slightly fallen to 1,400-1,600 yuan per metal ton. Although northern mines are still under seasonal shutdown in March, the restart and resumption of production at mines that had reduced output during the Spring Festival holiday is expected to bring some additional incremental supply. Some mines in the north have not yet fully resumed production, but with sulfuric acid prices remaining stable above 1,000 yuan/ton and other minor metal prices rising significantly, smelters’ production enthusiasm remains fairly good. Supply is expected to recover to a certain extent; however, given that conditions on the mine side remain tight, there is limited possibility of a substantial surge in supply. With fundamentals improving on the supply side, zinc may face some pressure, but this year is the first year of the “Fifteenth Five-Year Plan”—optimism about grid construction could help drive a rebound in zinc demand, meaning the room for zinc prices to fall further may be limited. (Chuangshi Futures)