Zinc prices have fluctuated downward this week
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According to the Commodity Market Analysis System of Shengyi Society, as of July 30th, the zinc price was 22490 yuan/ton, a fluctuating decrease of 7.2% compared to the zinc price of 24236 yuan/ton on July 1st.
Macro dynamics
The People’s Bank of China conducted its second MLF operation this month, cutting interest rates by 20 basis points beyond expectations. Analysis suggests that the increase in MLF operations this time has released a signal of easing, meeting the medium and long-term funding needs of financial institutions. The US GDP in the second quarter exceeded expectations, with a month on month growth of 2.8%. The core PCE price index fell to 2.9% month on month, still higher than expected. The implementation of the Fair Competition Review Regulations in August is expected to result in an increase in tax costs.
The inventory of zinc ingots in the Shanghai futures market decreased by 16975 tons compared to the beginning of the month
According to data released by the Shanghai Futures Exchange, as of July 29th, the zinc inventory level was 64863 tons, and as of July 1st, the zinc inventory level was 81838 tons, a decrease of 16975 tons from the beginning of the month.
The zinc ingot inventory in the London LME futures market decreased by 21300 tons compared to the beginning of the month
According to data released by the London Metal Exchange (LME), as of July 29th, the inventory level of London zinc was 240550 tons. The LME market’s zinc ingot inventory continued to decline slightly, with a decrease of 21300 tons from the beginning of the month.
Raw material side message
The Huoshaoyun lead-zinc mine in Xinjiang is located in the central part of the Karakoram Mountains, with characteristics such as large deposit scale, high ore grade, and simple mining and processing technology. The total investment of the Xinjiang Huoshaoyun Lead Zinc Mine project is 26.17 billion yuan, including 12.221 billion yuan for mining engineering, 5.433 billion yuan for long-distance slurry transportation pipeline engineering, and 8.516 billion yuan for smelting engineering. At present, the mine has completed a total of 600000 cubic meters of stripping and extracted 60000 tons of ore.
Future forecast
Business Society data analysts believe that the tight supply situation in the mining sector in July has not yet reversed, and the uncertainty overseas has intensified the overall pessimistic expectations of the market. Market risk appetite has sharply declined, suppressing zinc prices. There have been recent news of overseas market resumption of production, but overall market consumption is currently poor. Domestic production remains sluggish, with demand pulling down the center of zinc prices. The fundamentals are mixed with long and short positions, and downstream purchases are made at low prices, resulting in significant destocking. Affected by external factors, the rebound ability of Shanghai zinc is insufficient, but with the support of the expected peak season of gold, silver, and silver, the short-term zinc price market is expected to maintain a volatile pattern.
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