20240808-大越期货-沪锌期货早报_15页_983kb

Market analysis summary report for zinc futures.
August 8, 2024

Date: August 8, 2024
Prepared by: Da Yue Futures Investment Consulting Department
Investment consulting certificate: Z0013626
Contact: 0575-85226759 or telephone: 0575-88333535
Address: 7/F, No.186 Jiefang North Road, Yuèqū District, Shaoxing City, Zhejiang Province
Email: dyqh@@dyqhinfo

Zinc Analysis

1. Fundamentals: According to the latest report by the World Bureau of Metal Statistics (WBMS), global zinc production plateaued slightly in May 2024, extending a trend from January-May, but two major economies faced industrial overcapacity issues. Output totalled 1.14 million tonnes in May, compared with 1.14 million tonnes for January-May combined, averaging over 228,000 tonnes per month. Imports are crucial to the Chinese supply and pricing influence, especially from Canada and Russia, showing that global trade flows remain significant for China.

2. Basis: The reported basis (domestic spot price minus London Zn3 price) has remained relatively stable or slightly soft over recent weeks, keeping primary smelters snug but not significantly distressed. Refinery shut downs for maintenance and energy curbs have continued, however, adding to micro supply-side pressure. China's domestic demand also remains sluggish compared to a year ago.

3. Stocks: LME zinc inventories remain exceptionally high (close to all-time high volumes), supporting lower LME/ZNT prices via arbitrage, but not yet providing strong upside. The prompt delivery premium has also remained stuck close to zero, reflecting tightness towards prompt physical remains muted. Exchange held 19,736 tonnes on [data date].

4. Technicals:

   • ZN and ZNT remain significantly negative basis against LME Zn3, suggesting Physical Zn3 call structure pressure has increased for this quarter.
   • Both zinc contracts exhibit strong resistance tested at the upper channel boundary (Zn3 around $2,800-2,900 and ZNT around $1,650-1,750 vs spot). Below these levels, the technical picture becomes more bearish.
   • On a cluster chart, ZN has formed multiple lower highs, with declining volume at this week's pivot. ZNT has also failed to clear the previous significant resistance zone. Moving average support appears to be holding for now, but the longer-term (30-period) MA is maintaining a bearish bias below the 20-day MA.
   • Stochastics are forming a slight bottoming pattern near oversold territory, but remain unreliable as a leading indicator.

5. View: Zinc fundamentals remain challenged despite some potential micro supply-side disruptions. Record inventories sustain a bearish backdrop. However, Chinese metal imports are expected again this year (HY2024 Chinese Mill Restart Plan publishing schedule post Oct). We anticipate modest correction attempts upon reaching critical technical resistance zones. With ongoing destocking and weaker sentiment from both London and China buying demand, prices face a significant downside risk before a potential pause/technical consolidation.

Disclaimer:
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