Zinc prices continue to rise this week

According to the Commodity Market Analysis System of Shengyishe, as of March 14th, the zinc price was 21434 yuan/ton, an increase of 4.12% compared to the zinc price of 20586 yuan/ton on March 1st. The Luoping Zinc Electric Fule Lead Zinc Mine has ceased production, and many zinc smelters in China have plans to reduce production through maintenance. The supply of zinc in the market has decreased, and domestic environmental pressure continues. Downstream purchasing willingness is average, and downstream demand is insufficient. The decrease in supply, combined with poor demand, has led to a favorable zinc market and a continuous rise in zinc prices.

Luoping Zinc Power: Fule Lead Zinc Mine Stopped Production

Luoping Zinc Electric announced that on March 7, 2024, the company received a production shutdown notice from the Luoping County Emergency Management Bureau. According to the production suspension notice, the company’s Fule Lead Zinc Mine will cease all production activities from today onwards. In addition to the shutdown of Fule Lead Zinc Mine, other mines of Luoping Zinc Power are also in a state of shutdown. Industry insiders have pointed out that due to the increasingly strict regulatory environment, the resumption of production at the Luoping Zinc Electricity Mine may take more than a year for the relevant mines to complete. In addition to Luoping Zinc Power, there are plans for smelter maintenance and production reduction in regions such as Hunan, Sichuan, Guangxi, Yunnan, Liaoning, and Gansu, which are expected to affect a reduction of nearly 30000 tons. Zinc smelters have reduced production and increased supply, leading to an increase in zinc supply in the market.

Environmental impact, poor downstream procurement

During the Two Sessions, environmental protection in the north has imposed production restrictions, and galvanized processing enterprises have reduced production significantly. The current production restrictions have not yet ended, and the consumer recovery is not as expected. Downstream sentiment towards accepting goods is not good, and there is no significant improvement in spot trading. The downstream production of zinc in the Tianjin market is limited by environmental protection, and the order volume is relatively poor, resulting in insufficient willingness to purchase zinc ingots; The transaction volume of zinc ingots in the Foshan market is also very low. Overall, the environmental impact has led to poor downstream production of zinc and lower than expected demand in the zinc market.

Future Market Forecast

According to data analysts from Business Society, in terms of supply, domestic zinc smelters have recently reduced production significantly, leading to a decrease in zinc supply in the market; The Huoshaoyun lead-zinc mine in Xinjiang is expected to be put into operation in the future, while the northern zinc mine is expected to resume production in the second quarter. The short-term supply of zinc is expected to decrease, while the long-term supply of zinc is expected to increase. The surplus supply of zinc in the market remains. In terms of demand, during the two sessions, due to environmental restrictions, downstream production of zinc was poor, and the demand for zinc in the market was lower than expected; In the future, downstream zinc enterprises are gradually resuming production, and the demand for zinc in the market is slowly recovering. However, due to poor macroeconomic performance, the growth of zinc demand is difficult to meet expectations. Overall, in the short term, the supply and demand of zinc in the market have decreased and the performance is average, with zinc prices expected to rise slightly. In the long run, the recovery of excess supply and demand in the zinc market is difficult to meet expectations, and it is expected that the zinc market will consolidate at a low level in the future.