Zinc prices continue to rise in December
| Thiourea |
According to the Commodity Market Analysis System of Shengyishe, as of December 29th, the zinc price was 21588 yuan/ton, an increase of 3.92% from the zinc price of 20774 yuan/ton on December 1st; From December 13th to December 26th, zinc prices rose continuously, with a growth rate of 3.42%. The macroeconomic data is positive, and the supply of zinc in the market is limited. Zinc prices fluctuated and rose in December.
Macro data is positive
According to S&P’s global market intelligence data, the initial PMI for the Markit service industry in the United States in December was 51.3, reaching a new high since July. The initial value of Markit’s manufacturing PMI in the United States fell to 48.2 in December. This is the lowest number since August this year. The Markit service industry PMI and comprehensive PMI in the United States reached new highs since July in December, while the manufacturing industry PMI shrank. The US economy slightly rebounded in December, ending the year at its fastest growth rate since July. On December 13th local time, the Federal Reserve held a meeting of the Federal Open Market Committee (FOMC) to discuss interest rates and issued a statement that the current rate hike cycle may have ended and the rate cut cycle is about to begin: the Federal Reserve will have three 25 basis point rate cuts in 2024. The Federal Reserve’s interest rate cut signal has boosted market enthusiasm and brought macroeconomic benefits; In December, the US dollar index continued to decline significantly, with metals denominated in the US dollar being cheaper for holders of other currencies. The non-ferrous metal market was positive, and non-ferrous metals generally rose.
Expected decrease in zinc supply in the market
The sanctions imposed by the Office of Foreign Assets Control, a subsidiary of the US Department of Commerce, have made Russian mining giant Sviblov the latest business person to be blacklisted. Another company affected by the Sviblov sanctions is Ozernoye, which is developing one of the world’s largest zinc mines. The mine is expected to account for 4% of global production. Affected by sanctions, the expected supply of zinc in the market has decreased, leading to an increase in zinc prices.
On December 21st, Myra Falls, a subsidiary of Tok, announced that it will close the mine and beneficiation plant due to increased operating costs and accept long-term maintenance. The zinc production of the mine is about 30000 metal tons per year. It is estimated that these mines will continue to bring a reduction of 154600 metal tons next year, accounting for 1.29% of the global zinc ore supply.
Due to weather conditions, mines in northern China have gradually experienced seasonal production reductions, with a shutdown period of about 4-5 months. The overall impact on production is 55000 metal tons, compared to 47000 metal tons in the same period last year. The expected decrease in domestic zinc ore production and the expected decrease in zinc market supply.
Weak demand for zinc in the market
Environmental protection and production restrictions have reappeared in the northern region, and the commencement of galvanizing has declined; There is no significant increase in zinc oxide orders, and overall production has shrunk; The number of new orders for die-casting zinc alloy has declined, and the impact of domestic cold waves has led to a decline in infrastructure and real estate construction. Terminal demand has entered a seasonal off-season, and downstream demand for zinc ingots has declined.
Future Market Forecast
According to data analysts from Business Society, macro economic data in the United States has rebounded, with the US dollar index falling in December and non-ferrous metals generally rising; In terms of supply, the United States has imposed sanctions on Russia, resulting in a reduction in the production of Tok Group’s zinc mine and a phased reduction in domestic zinc mine production, leading to an expected decrease in zinc mine supply; The impact of environmental protection and seasonal off-season has led to weak demand for zinc in the market. In the future, there has been an oversupply of zinc ore in recent months, and the overall zinc market is still oversupplied. The supply of zinc ore has continued to decrease in the past 24 years. With the end of the seasonal off-season, the demand for zinc in the market will eventually rebound. The weak zinc market in January is still expected, and the zinc price is expected to fluctuate slightly. With the end of the seasonal off-season in the zinc market, the expectation for medium and long-term zinc prices to rebound and rise.
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