Zinc price fell in October
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According to the data monitoring of the business community, the domestic economy was weak in October, and the “silver ten” was not good enough. The metal sector fell generally. In October, the zinc price fell by 3.97%, leading the decline in the current non-ferrous metal sector. As of October 31, the zinc price was 23730 yuan/ton, down 3.97% from 24710 yuan/ton on October 1 at the beginning of the month. On October 31, the current price index of nonferrous metals was 1142 points, down 16 points from yesterday, down 27.12% from the peak of 1567 points (2022-03-09) in the cycle, and up 62.22% from the lowest point of 704 points on November 23, 2015. (Note: the cycle refers to the period from December 1, 2011 to the present). In October, the current price index of nonferrous metal plate fell in shock, and the current zinc price fell sharply in late ten days, with zinc price leading the decline of metal plate.
Manufacturing PMI contracted in October
According to the data released by the National Bureau of Statistics, the manufacturing purchasing manager index (PMI) in October was 49.2%, down 0.9 percentage points from the previous month. In October, affected by the frequent outbreaks of domestic epidemics, China’s purchasing manager index fell back, the PMI of energy intensive industries fell to the contraction range, and the demand for non-ferrous metals contracted significantly. The demand of zinc market shrinks, and the downward pressure of zinc price increases.
Increase in domestic zinc concentrate processing cost
It can be seen from the trend chart of domestic zinc concentrate processing fees that since June, zinc concentrate processing fees have risen steadily. As of October 31, the domestic zinc concentrate processing fee was 4500-5000 yuan/ton, 500-800 yuan/ton higher than that in September, and 1000 yuan/ton higher than that in June, 3500-3800 yuan/ton. The zinc concentrate processing fee continued to rise significantly, and the smelting profits became more and more rich. The zinc smelting enterprises’ enthusiasm to start the business rose, and the supply of zinc was expected to increase. Recently, the epidemic situation around the country has increased, and the demand was slightly affected. Weak demand and supply warmed up, and the downward pressure on zinc price increased.
Global zinc mine output will decline in 2022
In 2022, the overall recovery process of the mine is far less than expected. In the first half of the year, factors such as labor shortage, rainwater backflow, mine failure, mine closure and grade problems caused by the epidemic were superimposed, and the mine recovery in the first half of the year was extremely poor; In the second half of the year, the grade and recovery rate of some mines overlapped by epidemic control increased significantly, which led to the increase of mine output. However, the overall zinc mine output in 2022 will still decline a lot. In 2022, the output of overseas mines decreased by 242200 tons (4.45%) year on year. The output of zinc ores declined, the supply of zinc ingots declined, and the zinc market still had some support for growth.
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The high electricity price in Europe affects the demand of zinc industry chain
The high electricity price in Europe has affected the commencement of zinc smelting and downstream zinc plating enterprises. Glencore Nordenham Smelter will be closed soon. By the end of 2022, the closed zinc capacity in Europe will reach nearly 600000 tons/year; In the first half of 2022, German electroplating enterprises are faced with paying 20 times the power cost. After adopting the standard electricity price in September, the power cost may still reach about 500000 euros per month. However, they are unable to pass on this impact to the automobile customers (customers in the automobile industry), and the losses lead to the decline of the enterprise’s start-up. It is expected that the output of galvanized sheet will fall to the lowest level since the fourth quarter of 2020; The die casting industry is also facing the pressure of weak construction industry, and the average operating rate of the industry is considered to be 20-30% lower than that in the first half of the year. The demand is weak, and the downward pressure on the zinc market increases.
Future market forecast
According to the data analysts of the business community; Domestically, the economy is weak and contracting, the soaring zinc concentrate processing fees stimulate zinc smelting enterprises to start work, and the supply of zinc is increasing and the demand is weak; In terms of overseas markets, the output of overseas zinc mines has declined, the supply of zinc market is insufficient, the cost of electricity remains high, and the supply and demand of zinc ingot industry chain are weak. To sum up, against the backdrop of weak supply and demand in the zinc market, domestic demand remains weak, European economic weakness is difficult to improve, and weak demand in the zinc market may continue in the fourth quarter; The production increase of domestic zinc smelters is enough to make up for the lack of production reduction of European zinc smelters, and the supply of zinc is still sufficient. In the future, the downward pressure on the zinc price is large, and the support for the rise remains. It is expected that the zinc market will remain weak in the fourth quarter, and the weak zinc price will be adjusted broadly.
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