Zinc price fell in December

According to the data monitoring of the business community, the zinc price was 23974 yuan/ton as of December 31, down 4.07% from 24992 yuan/ton on December 1 at the beginning of the month. The demand of zinc market was less than expected, and the zinc price fell in December.

Domestic PMI fell continuously, and the demand of zinc market was lower than expected

In December, the manufacturing purchasing managers’ index (PMI) was 47.0%, down 1.0 percentage points from the previous month, lower than the critical point. The manufacturing industry’s production and operation prosperity level fell back from the previous month. PMI has been lower than 50% for three consecutive months. Affected by the impact of the epidemic situation and other factors, China’s purchasing manager index has declined from last month. With the gradual improvement of the epidemic situation, the market trend is expected to recover in the later period.

Supply and demand factors in zinc market

In terms of supply, the cold wave is coming, domestic electricity is occupying industrial electricity, European zinc smelting may be affected by production reduction, and zinc supply is expected to shrink. All EU countries agreed that the price ceiling of natural gas is set at 180 euros/megawatt hour, which is far lower than the price proposed by the EU last month. Natural gas prices fell, zinc smelting costs fell, zinc smelting output is expected to increase, and European zinc supply is expected to increase.

On the demand side, the Federal Reserve released a hawkish signal while reducing the rate increase. The Federal Reserve decided to continue to raise interest rates. The optimistic expectation of the market was frustrated, and the pessimism of economic recession spread. The domestic prevention and control measures have changed, the macroeconomic recovery has not been as expected, the domestic factory output has slowed down, retail sales continue to decline, the supply and demand of zinc market have not met expectations, the impact of the epidemic has affected part of the employment, most enterprises plan to leave in advance, the off-season effect may be greater than in previous years, and the downward pressure on zinc prices has increased.

Future market forecast

According to the data analysts of the business society, the cold wave is coming, industrial power consumption is decreasing, and zinc smelting output is decreasing. With the reduction of zinc smelting costs in Europe, the supply of zinc is picking up. In terms of demand, the Federal Reserve is still raising interest rates, and the market pessimism is spreading. However, the domestic market recovery is not as expected, and the demand for zinc is poor. In general, the expected increase in supply and demand of zinc market was less than expected, and the zinc price fell in shock. In the future, the supply of zinc is expected to recover, and the zinc price is expected to rise slightly.