Zinc prices soared after the festival

According to the data monitoring of business society, the zinc price continued to rise after the festival, and the zinc price soared on the 14th. As of October 14, the zinc price was 25086.00 yuan / ton, up 5.25% from 23835 yuan / ton on the previous trading day; Compared with the zinc price of 22686 yuan / ton on October 1 at the beginning of the month, an increase of 10.58%. The power shortage increased the market’s concern about the commencement of zinc smelters, stimulated the rise of zinc price, and the domestic spot zinc price went straight to the highest price in 17 years.

LME zinc price hit a record high

According to the trend chart of LME zinc price, LME zinc price opened at US $3421.00/t on October 14 and closed at US $3503.60/t, an increase of 2.41%; The highest price is US $3637.50/ton, up 6.33% from the opening price and about 30% from the beginning of this year. Today’s zinc price is a new high since 2007.

Strong trading limit of Shanghai zinc

According to the trend chart of zinc price in Shanghai futures market, on October 14, the main contract of Shanghai zinc touched the daily limit, up 7.98%, and now it is reported as 25700 yuan / ton, a new high since March 2018.

Power rationing in zinc City

In late September, Guangdong, Shandong, Qinghai, Ningxia, Yunnan, Guangxi, Hunan, Anhui, Sichuan, Henan, Chongqing, Inner Mongolia and other places successively issued power rationing or staggered peak power consumption notices. Most provinces in China have encountered power rationing. Zinc smelting, as one of the main power consuming industries, has a great impact on the zinc smelting industry and the output of zinc smelting has decreased. In October, Guangxi, Yunnan and Hunan provinces with severe power rationing in September did not ease. After the dry season in Yunnan, the output of some smelters was expected to be lowered, and the power rationing in Jiangsu and Zhejiang increased. Some enterprises were notified to start four-day off and three-day off, and the output of zinc City decreased.

Electricity bills soar in Europe

According to the data of European Intercontinental Exchange, compared with the price of about 6 euros in the middle of last year, the price of natural gas has soared more than 10 times recently, reaching an all-time high. As energy prices soared, electricity prices in Europe also soared. At present, the electricity price per megawatt hour in the UK has risen to 285 pounds, an increase of 700% over the same period, the highest since 1999. Electricity prices in Spain have tripled since December and in Germany have risen by 50%. The European power crisis has further affected relevant industries. As a high power consumption industry, zinc smelting is bound to reduce its production capacity due to the soaring electricity price.

Reduction of zinc production by 50% in three European smelters

According to foreign news on October 13, nyrstar said that with the significant increase in power costs and carbon emission related costs, it is no longer economically feasible to operate the plant at full capacity. It will cut zinc production at its three European smelters by 50% from Wednesday to cope with soaring electricity costs. Nyrstar belongs to Trafigura group and is one of the largest zinc metal producers in the world. It is understood that the total output of its three smelters is 700000 tons, accounting for more than 5% of the world. A 50% reduction in production is equivalent to affecting the global zinc production by 2.5%. The news of sharply reducing the output of zinc smelters was too stimulating, and the supply expectation of zinc market fell sharply, stimulating the sharp rise of zinc price.

India’s power crisis intensifies and zinc supply is expected to shrink

Due to the shortage of coal supply, India has become the latest country facing a serious power crisis. According to the data of India’s power sector, as of the beginning of October, the average coal inventory of 135 thermal power plants in India was only 4 days, lower than the 13 days in early August. In the factories monitored every day, more than half of the inventory is less than three days. The zinc smelting capacity in India accounts for 5% of the global zinc smelting capacity. The power crisis in India is bound to affect the large power consumer of zinc smelting, and the expectation of zinc supply reduction in the zinc market is intensified.

The fourth national dumping

According to Announcement No. 2 of 2021 of the State Food and material reserve bureau, it is decided to put the fourth batch of national reserve zinc in 2021 on October 9, with a total sales volume of 50000 tons. The fourth batch of reserve zinc was put into the market, which alleviated the short-term supply of zinc market and increased the short-term supply of zinc market.

Market Overview

Analysts of business society believe that: affected by the soaring global energy prices, power shortages have occurred all over the world and power rationing has continued all over the world. As a large power consumer, the risk of production restriction and shutdown of zinc smelting has intensified. The soaring electricity price in Europe has led to a surge in the cost of zinc smelting enterprises, and the production of European zinc smelting enterprises has been reduced by 50%, which has further exacerbated the market’s concern about the reduction of output of zinc smelting enterprises, and the driving force for the rise of zinc market has increased, The short-term zinc market is still strong. In the medium and long term, global inflation makes the downstream start-up expectation drop, the demand expectation of zinc market drops, the medium and long-term rise support of zinc market is insufficient, and the state has repeatedly thrown reserves to stabilize the zinc market, and the space for zinc price surge is limited. It is expected that the short-term zinc price will rise strongly, and the medium and long-term zinc price will rise slightly.