SHANGHAI, Mar 28 (SMM) – Zinc prices are likely to stay rangebound with pressure as downstream consumption is recovering slower while ore supply was sufficient, SMM believes.
China’s domestic consumption is affected as another round of cutback has been imposed to galvanising plants in north China earlier this week. The move was in response to the medium-to-high level of air pollution in the area. The restriction was estimated to be removed no earlier than Wednesday March 28.
Though short, the cutback still has an impact on demand as restrictions like this have been enforced several times in north China this month.
Once the restriction is lifted, downstream demand is likely to pick up gradually from April. However, whether zinc smelters would cut production in a bid to hold up offers remains to be seen.
Ore supply, on the other hand, remains sufficient from both overseas and domestic mines. Smelters saw no issues in production, SMM learned.
Zinc inventories also weighed on prices although such pressure has seen signs of easing.
LME zinc inventory stood at 210,725 mt on Monday March 26, down slightly from the previous week. Stocks in Shanghai, Guangdong and Tianjin dropped 19,200 mt to stand at 245,900 mt as of late last week, SMM survey showed. We expect to see inventory dip further if downstream demand continues to pick up.
Although concerns of a China-US trade war were also easing, most participants took a wait-and-see approach amid a cautious sentiment.
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