Is there any possibility of downward trend in the

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Whether the short-term zinc price is still possible to decline

overseas zinc mine production showed a recovery and growth trend in 2018. Domestic imports of zinc concentrate in 2019 were 2.968 million tons, an increase of 524000 tons, or 21.5%. Since the end of the third quarter of 2018, the release rate of overseas zinc mine capacity has significantly accelerated. Based on the combing of overseas mine projects, it can be seen that the increase of zinc concentrate in the future mainly comes from the further release of production projects of new century, MMG, Glencore, Vedanta and other companies. According to the production expansion plan of overseas mining enterprises, it is expected that overseas zinc concentrate will have more than 700000 tons of new capacity release capacity in 2019. With the strong support of the state, the zinc price is often judged according to the time when the mine production cycle is about years ahead. With the gradual increase of mine capital expenditure after the rebound of zinc price, the new output of global zinc mines will gradually reach production in 2019, and the production capacity is expected to reach a peak in 2020. Therefore, the global raw material supply capacity in 2019 will be significantly stronger than that in 2018

last Saturday, yinman mining industry in Inner Mongolia stopped production due to a commuter safety accident. However, because the annual output of zinc concentrate of yinman mining industry only accounts for about 3.5% of the total output of Inner Mongolia, the actual impact in the short term is limited. As for whether it will cause the relevant chain reaction and lead to large-scale domestic safety inspection, which will cause greater interference to the domestic mine supply, it is not yet confirmed at the end of the 1990s. It is expected that the accident will not be the focus of continuous market speculation until there is further information to confirm the guidelines. Moreover, due to the relatively certain increase in production of foreign mines, the profits of imported mines are still considerable. At present, the domestic raw material supply guarantee is expected to continue to maintain a high level

smelting bottleneck is difficult to become the main focus

in 2018, the biggest environmental protection problem around the zinc smelting industry in China is to solve the accumulation of hazardous waste zinc slag, of which only Hanzhong zinc industry has a great impact on the existing smelting capacity. Although Hanzhong zinc industry is still operating with low energy efficiency, with its supporting comprehensive utilization and harmless treatment project of slag officially started in November last year, this bottleneck is expected to be solved as soon as the third quarter of 19. According to the existing capacity of Hanzhong zinc industry, the maximum loss of monthly capacity during low production operation is expected to be about 20000 tons of metal, less than 5% of the domestic average monthly output. Before the new contradiction between supply and demand occurs, the gap can still be filled by other refineries in the short term, and the impact is expected to be small. The state's environmental protection rectification of the zinc smelting industry in 2018 may affect the release pace of new refinery capacity and the willingness of capital expenditure to a certain extent. However, in 2019, with the substantial improvement of refinery profits and the marginal improvement of smelting enterprises' adaptability to environmental protection, it can be expected that the new domestic production capacity will be accelerated, and the operating rate of most refineries' existing production capacity still has some room to improve on the basis of 18 years

the supply pressure of smelters under high profits increases

for smelting enterprises, with the continuous rise of processing costs, it is difficult to maintain a long-term balance between supply and demand under the incentive of high profits. After 2015, the domestic zinc smelting industry has formed a two eight sharing mechanism after the zinc price exceeds 15000 yuan/ton, and the high zinc price has a certain increase in refinery profits. However, due to the sharp rise of the current processing fee, the proportion of zinc price sharing revenue will be reduced, and the production capacity of smelting enterprises may be less sensitive to zinc price. At present, the average processing cost of domestic zinc ores has reached 6000 yuan/ton, and the average TC of imported ores is 220 dollars/ton. If the income of refinery by-products is included, the average income of domestic refineries will exceed 7500 yuan/ton based on 21800 yuan/ton of spot zinc. Without considering the increase of the rigid cost of the refinery, the profit level of the refinery is at the highest level in the past three years. With the gradual realization of overseas zinc mine production increase, there are more smooth objective conditions for the transmission of relatively loose raw materials to zinc ingots. The ability of domestic refineries to match demand will be significantly enhanced under the background of high profits. The reduction of refinery production caused by profit may be gradually diluted in 2019

during the Spring Festival, the domestic social inventory exceeded the expected total of 50900 tons, and the inventory has continued to increase recently. Although the stock accumulation is seasonal, the marginal change of inventory can still prove that the refinery capacity currently has a certain price elasticity. In the early stage, the market will reduce its concerns about the capacity bottleneck caused by non-profit factors such as environmental protection

in the short term, the issuance of local bonds is ahead, and the infrastructure is expected to work, so that the market may be optimistic about the future consumption increment. In addition, the Sino US trade negotiations are progressing smoothly, and the overall domestic short-term macro environment is warmer, which raises the risk appetite of the market. From the spot side, the improvement in consumption only stays at the expected level, and there is still a lack of sufficient data support in reality. Based on the fact that the downstream industry expectations may still be relatively pessimistic, the domestic spot premium continued to weaken, and the transaction did not improve significantly. Market procurement replenishment tends to be cautious. The pressure at the spot level may continue to pressure the zinc price. The accumulated risk of price correction cannot be ignored

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