I think the main reasons for the current zinc price increase are:
I. Global inflation
The continued weakening of the US dollar and rising energy prices are also important factors for the rebound of zinc prices. Since commodity prices are usually denominated in dollars, the depreciation of the dollar will lead to an increase in commodity prices. In addition, the liquidity released by the Fed's interest rate cut did not flow to emerging markets as everyone thought, but turned to the most certain commodities in inflation.
However, in the context of high global inflation, interest rate cuts have also become a "sharp weapon" for the Federal Reserve to save and stimulate the US economy after the subprime mortgage crisis. For inflation expectations, interest rate cuts are obviously worse. In the past, the continuous quantitative easing policy of the Federal Reserve led to a persistent excess of global monetary liquidity. Inflation in the United States and even the world remains high, which has triggered strong demand from investors for safe haven. Abundant funds have to buy a lot of gold, crude oil, basic metals, agricultural products and even a package of these commodities, which has promoted the deepening of the commodity bull market.
2. The global supply side reduces production.
Nyrstar, a major zinc producer, announced that its three zinc smelters in Europe will reduce production by as much as 50% from Wednesday. According to estimates by Commerzbank and Haitong Securities, the total annual production capacity of these three smelters is about 700,000 tons. If the production is reduced by 50%, the global zinc supply will be affected by 2.5%.
Three. Low global inventory
According to the statistics of Reuters, the total zinc inventory in LME registered warehouses decreased by 1475 tons to 189600 tons, the lowest since 1. Therefore, LME spot zinc is 42 dollars higher than three-month zinc per ton, which is the highest level in two years since 20 19 1 1. The reason for the rapid spot premium is that the market is worried about tight supply.
According to the data of Shanghai Nonferrous Metals Network, the domestic refined zinc output in September was 5 1. 1.9 million tons, an increase of 0.59% from the previous month, far lower than expected in August. In June, 5438+ 10, under the background of continuous production reduction of related enterprises in Guangxi and Yunnan, it is expected that the output will still decrease slightly from the previous month. Supply disturbance continues, and domestic zinc stocks remain low, which will effectively support short-term prices.
Four. The Impact of the Current Energy Crisis on Supply
The international lead and zinc research group originally predicted that the global supply of refined lead and zinc will exceed the demand this year and next, but the power crisis may change this situation. It is predicted that the oversupply situation in the global zinc market will shrink next year. The energy crisis affects supply, and the superimposed inventory is low. The prices of industrial metals, led by copper, zinc and aluminum, will remain high. Deshangyin believes that if the output declines for a long time, it may have a huge impact on the zinc market, resulting in a serious shortage of supply.
5. The global zinc concentrate processing fee level is still low.
The output of refined zinc in Europe in 2020 will be 24 1 10,000 tons. In addition to Nyrstar, there are 800,000 tons of smelting capacity of Glencore, 300,000 tons of Tektronix and about 500,000 tons of Boliden. However, the low processing fee level of zinc concentrate leads to low profits of smelting enterprises. The agency predicts that if energy prices remain high in the fourth quarter, other refineries are still at risk of reducing production. Zinc prices are expected to continue to rise.
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The short-term prices of industrial metals such as zinc are strongly supported by power cuts and low global stocks. The price of industrial metals has been closely related to inflation. Both the reduction of metal production and the soaring inflation will threaten the global economic recovery, which once again proves that the conclusion that the Fed insists that "inflation is only a temporary phenomenon" is wrong, and inflation will continue at least throughout the northern hemisphere winter this year and early 2022. Zinc prices are still expected to continue to rise.