Due to the accelerated economic recovery and continued high temperatures, the demand for electricity continues to rise, resulting in a shortage of electricity supply in the southern region, and some cities in Guangdong and Yunnan have started off-peak electricity consumption. This round of off-peak electricity consumption has a certain impact on some non-ferrous smelting enterprises. Zinc smelters in Yunnan Province have already begun to implement power and production restrictions, and the initial plan is limited to mid-to-late June. According to the current production reduction situation, it is estimated that Yunnan refined zinc will have an impact of 12,000 to 15,000 tons in May. According to statistics, Yunnan’s zinc smelting capacity accounts for about 17% of the country. The reduction in Yunnan’s production will reduce the domestic refined zinc supply and the zinc market will be insufficient. , Zinc prices increase momentum. Some enterprises in Guangzhou, Foshan, Dongguan, Huizhou, Zhuhai, Zhongshan, Chaozhou and other places are required to use electricity at peak shifts, and there is no plan to reduce production by smelters in Guangdong. The overall zinc market supply is expected to decrease, and zinc prices increase momentum.
Zinc price trend is rising
In May, zinc prices fluctuated and hit a new high since 2019. As zinc prices continue to rise, the zinc market continues to rise, and the zinc market is in the peak demand season. Demand is expected to increase in the market outlook, and there is sufficient momentum for zinc prices to rise.
Analysis
During the peak season of zinc demand, the zinc market has sufficient momentum to rise, and as the economy picks up, demand in the zinc market is expected to increase; the summer electricity peak comes and the Yunnan zinc ingot smelter produces staggered production, resulting in a decline in refined zinc output and a decrease in zinc supply. The supply in the zinc market is decreasing and demand is expected to increase. The supply in the zinc market exceeds or intensifies, and the price of zinc may hit a new high. Although the state's price regulation has a certain cooling effect on the zinc market, the basic market demand in the zinc market is in short supply, which makes it difficult for zinc prices to rise. The market outlook for zinc prices is expected to fluctuate and the increase in zinc prices slows down. Multiple power cuts have prompted the zinc market to heat up, but the price of zinc is unlikely to hit a record high. It is expected that the price of zinc will stabilize after a short-term rise.
Related listed companies: Zhongjin Lingnan (000060), Chihong Zinc Germanium (600497).
