Zinc price in February

According to the Commodity Market Analysis System of Shengyi Society, as of February 28th, the zinc price was 234838 yuan/ton, a decrease of 1.23% from the zinc price of 23730 yuan/ton on February 1st. In February, zinc prices fluctuated strongly within the range and rebounded.

At the macro level, the Trump administration recently announced the resumption of tariffs on imported goods, raising concerns in the market about the escalation of global trade frictions. This macro bearish trend continues to affect the commodity market, particularly exerting significant pressure on the upward potential of zinc prices.

Supply and demand side

This month, the profit window for zinc ore imports has closed, resulting in relatively light offers and transactions for imported minerals. However, driven by price advantages, refineries still prefer to choose domestically produced minerals as their main raw materials. In addition, according to domestic mining trends, some lead-zinc mines that were previously shut down due to reasons are expected to resume production in March, which will lead to a continuous increase in supply from the mining end. However, at the current level of processing fees, refineries are still in a loss making state, so the industry has a strong bullish sentiment towards processing fees.

On the demand side, there is support. As downstream galvanized sheet and die-casting zinc alloy enterprises speed up production after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival), stock replenishment is expected to continue to strengthen, forming a strong price support effect.

Although the operating load of galvanized and die cast zinc has significantly increased compared to the previous period, due to the slow resumption of production by downstream enterprises, domestic social inventory continues to increase, and the turning point for destocking is later than previously expected. Galvanized and die cast zinc, as the main consumption areas of zinc, should have driven an increase in demand for zinc due to the rebound in operating load, thereby reducing social inventory. However, the actual situation is that downstream enterprises have a slow pace of resuming production, which directly leads to a slower than expected recovery on the demand side. Therefore, although the operating load on the production side has increased, the demand side has not kept up in a timely manner, resulting in the accumulation of domestic social inventory.

Future forecast

Market outlook for March: The expectation of increased processing fees has strengthened, refinery profits have increased, production pressure has increased, demand recovery is slow, and zinc prices may mainly fluctuate weakly.