The most popular way to increase production is to

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Last week, the non-ferrous metal futures were weak and volatile. The worst performing variety was zinc, down 3.66%. Why is Shanghai zinc favored by short sellers? According to the analysis of insiders, at present, the supply of raw materials in the zinc market is loose, the weak demand suppresses the price, the processing fee remains high or further boosts the production enthusiasm of smelters, and the zinc price is difficult to strengthen significantly in the medium term

loose supply and high processing fees

from a macro perspective, Baocheng futures research pointed out that due to the current downward pressure on the domestic economy has not been relieved, short-term external disturbance factors have decreased, but market concerns still exist, and the trend of non-ferrous metals is mainly weak. "Under the macro weak and loose supply and demand pattern, zinc prices have rebounded in the short term, but they are still running in the downward channel."

behind the weak zinc price, the first is the consensus expectation of the market for the loose ore end. According to the data of Baocheng futures research 2, which attaches great importance to the task of building a new system for the new material industry, in December 2018, the average processing fee of domestic zinc ore was 5100 yuan/ton, up 1950 yuan/ton from the low at the beginning of the year, an increase of 61.9%. At the beginning of December, the processing fee of imported zinc concentrate was $155/ton, an increase of $140/ton or 933% over the beginning of the year, reflecting a large increase in the supply of zinc ore at home and abroad

in fact, since the beginning of this year, domestic zinc smelters have started frequent maintenance, the demand for zinc ore has decreased, and the supply of zinc ore has increased significantly. The direct result of this situation is that the processing fee of zinc ore has been rising again and again

from the zinc concentrate market performance last week, the domestic zinc concentrate processing fee increased by 50 yuan/ton compared with the previous week, the domestic zinc concentrate (Zn 50%) processing fee was reported as yuan/ton, the imported zinc concentrate TC was reported as $150/ton, and the smelting processing fee remained high

the expected increase in output suppresses the zinc price

it is worth noting that the increase in processing fees under the background of loose supply of zinc ore also paves the way for smelters to improve profits and increase output

according to the data released by the National Bureau of statistics, the zinc output in October was 501000 tons, a year-on-year decrease of 7.6% and a month on month increase of 9.87%; The monthly output was 4.652 million tons, a year-on-year decrease of 3.1%. In October, the refined zinc output could be tested by cantilever Charpy sample suspension zigzag test, showing a significant recovery

according to the analysis of chaotic Tiancheng futures, the smelter is more active in production at a higher profit level. It is expected that the output will continue to rise month on month. However, environmental factors limit the production capacity, and it is expected that the output will be released slowly

the enthusiasm of smelters to increase production is directly proportional to the processing cost of zinc ore. According to the analysis of insiders, in 2019, with the further release of global zinc ore production, the zinc ore processing fee has entered an upward trend. "In 2019, it is necessary to pay attention to the gradual transmission of the growth of zinc mine output to the increase of zinc ingot output, which is similar to the transmission effect of the tightening of zinc mine supply on the reduction of zinc ingot production in. It can be confirmed according to the specific methods" pointed out by the Baocheng futures research. There are few relevant terms. In terms of demand, according to the analysis, since the macro-economy has not improved significantly, the terminal consumption continues to be weak, the demand for non-ferrous metals is average, and the market confidence is poor. "Last week, the prices of cold and hot coils at the end of raw materials remained weak as a whole. The transportation costs in the North increased, and the transaction continued to weaken. The consumption of zinc alloy and zinc oxide market was also relatively cold." Chaotic Tiancheng futures analysis

looking forward to the future, Baocheng futures research pointed out that, on the whole, the macro weak pattern has not changed, and the terminal demand is difficult to improve in the medium and short term. Combined with the loose supply and demand of the zinc industry, the medium-term Shanghai zinc price will continue to be under pressure

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