Zinc Metal Social Stocks Slide, Is Demand Warming Up?
Introduction
This was mainly due to the impact of tighter supply, while the demand side maintained its off-season performance unchanged. In the short term, with the arrival of the end of the year, the downstream of zinc metals may have a certain production sprint program while inventory may continue the seasonal de-stocking performance, is expected to be close to the low point of the year.
Counter-seasonal Stockpiling of Zinc Metal
Social inventories of Zinc as a whole showed the performance of first up, then down and then up, January-September trend with little difference from previous years, but into this October appeared anti-seasonal performance since 2021.
Demand side although there are marginal signs of improvement, but the overall has not exceeded expectations, just demand. Imported sources have a certain price advantage, the downstream consumption of inventory slowed down, pushing inventory higher.
Inventory Decline, Return to Seasonal Performance
The recent decline in social inventories has shown a relatively significant rate of decline. In the short term, the import window is closed and import inflow is reduced. Domestic smelters maintain production control situation, zinc metal output or little change.
And the demand side, despite the gradual entry into the off-season, but near the end of the year, downstream enterprises sprint production program or appear, is expected to drive the zinc consumption, driven by inventory de-stocking, short-term inventory is expected to return to seasonal performance.
Demand Remains Rigid During The year
Despite the zinc downstream enterprises have a sprint production plan, but the overall expected to the end of the year and even the upcoming Spring Festival holiday, the actual demand for zinc downstream may not have a super-expectation of the release of the demand growth may be roughly maintain the level of just demand.
The Chinese New Year holidays will reduce or suspend production activity, meaning that some zinc downstream companies may choose to slow down the pace of production, which could have a negative impact on zinc demand.
Conclusion
Overall, short-term demand is difficult to exceed expectations, but in the rigid demand resilience superimposed on the impact of supply tightening, may enter the de-stocking channel. However, on the price side of the impact is very little, the market price may be guided by the macro-guidance is more obvious.
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