1、 Market price trend

From the recent market prices, the price of melamine has indeed shown some stability and has shown a slight upward trend during certain periods. For example, according to the latest data from Shengyi Society, although the prices this week (based on January 21st as the reference date) have decreased compared to the beginning of the month, the daily increase is shown as 0.04%, indicating that there is a small upward space for prices on a specific date. This small fluctuation may be influenced by multiple factors, including raw material costs and market demand.

2、 Analysis of Supply and Demand Relationship

1. Supply side: The production capacity of melamine is relatively stable, and production enterprises in the industry usually adjust their production scale based on market demand and raw material costs. In a relatively stable supply situation, market prices are more likely to remain stable.

2. Demand side: The demand for melamine in downstream industries such as sheet metal and coatings is an important factor affecting market prices. With the recovery of the economy and the improvement of people’s living standards, the demand for melamine in these industries may gradually increase, thereby driving up market prices.

3、 Raw material cost

1. Raw material cost: The price fluctuation of raw material urea directly affects the production cost of melamine. When the price of urea rises, the production cost of melamine will also increase accordingly, which may drive up market prices. On the contrary, a decrease in urea prices may lower the production cost of melamine and exert some downward pressure on market prices. As of January 21st, the benchmark price of urea in Shengyi Society was 1705.00 yuan/ton, a decrease of -5.19% compared to the beginning of this month (1798.33 yuan/ton).

4、 Market outlook

Looking ahead, the melamine market is expected to continue to maintain a stable but rising trend. On the one hand, with the recovery of the economy and the increase in demand from downstream industries, the market demand for melamine is expected to further increase; On the other hand, integration and technological upgrading within the industry will help improve production efficiency and product quality, thereby enhancing market competitiveness. However, the fluctuation of market prices is still influenced by various factors, including raw material costs, policy regulation, international trade situation, etc. Therefore, enterprises need to closely monitor market dynamics and policy changes, and develop reasonable business strategies to cope with potential market risks.

In summary, the melamine market has indeed shown a stable but upward trend. However, this trend is not static, but is influenced and constrained by various factors. Enterprises need to closely monitor market dynamics and policy changes to address potential market risks and seize development opportunities.

According to the analysis of the Business Society’s market monitoring system, on January 21st, the reference price for the domestic silicon metal # 441 market was 11220 yuan/ton. Compared with January 1st (the market price for silicon metal # 441 was 11690 yuan/ton), the price decreased by 470 yuan/ton, a decrease of 4.02%.

From the market monitoring system of Shengyi Society, it can be seen that from January to present (1.1-1.21), the overall domestic spot market for silicon metal has shown a weak downward trend. The focus of the spot market for metal silicon in many regions of China is shifting downwards, including the market prices of metal silicon brands # 553, # 552, # 441, # 421, 3303, and other foreign silicon. As of January 21, the market price reference for oxygen # 553 in East China is around 10900-11000 yuan/ton, 441 # is around 11200-11400 yuan/ton, 521 # is around 11300-11600 yuan/ton, and 421 # is around 11500-11800 yuan/ton.

Analysis of Market Factors

Supply side: Currently, the overall operating rate of the domestic silicon metal market is at a low level, and there are few silicon metal factories in production in Yunnan and Sichuan regions. The market mentality is not good. In January, silicon metal factories continued to reduce production, and although inventory pressure was tight and accumulated slightly, demand conversion was not timely. The overall performance of the silicon metal supply side is still weak, providing limited support to the market.

On the demand side: The downstream market demand for silicon metal is cautious, and there are some essential orders in Xinjiang. The overall shipment of market inventory is slow, and there is insufficient market support from the demand side.

Market analysis in the future

At present, the pace of the Spring Festival is getting closer and closer. The fluctuation of the metal silicon market is not significant, and the market is mainly stabilizing and operating. The metal silicon data analyst of Business Society believes that in the short term, the domestic metal silicon spot market is mainly stable and operating, and specific changes in supply and demand information need to be paid more attention to.

The average price of domestic magnesium ingots in 2024 was 20600 yuan/ton at the beginning of the year and 16266 yuan/ton at the end of the year, with an annual decline of 21.04%. The highest point of the year was 20633 yuan/ton on January 19th, and the lowest point of the year was 16000 yuan/ton at the end of December, with an average annual price of 18344 yuan/ton. The trend of the magnesium ingot market in 2024 can be divided into three stages: a significant downward adjustment at the beginning of the year, a slight upward rebound in stable prices in the middle of the year, and a continued downward dip at the end of the year.

K-bar chart of commodity prices, using the concept of price trend K-line, in the form of a bar chart, reflects the weekly or monthly price changes. Investors can make buying and selling investments based on the changes in the K-bar chart. Red indicates an increase; Green indicates a decline; The height of the K-pillar represents the range of rise and fall. From the above chart, it can be seen that the magnesium ingot market rose for three months and fell for nine months in 2024. The largest monthly increase occurred in April, with a rise of 3.7%. The largest monthly decline occurred in March, with a drop of 6.88%.

The comparison chart of the annual trend of magnesium ingots from 2022 to 2024 shows that the market price of magnesium ingots is currently at its lowest level in recent years.

Analysis of Quarterly Price Trends in 2024:

first quarter

Starting from January 2024, magnesium prices have shown slight fluctuations. The manufacturer’s production is stable and the market supply is sufficient, but due to the approaching Spring Festival and the tense situation in the Red Sea, some export orders have been delayed, resulting in weakened demand and price reductions. Subsequently, the losses in the Lantan industry intensified, and some magnesium factories faced cost inversion pressure. However, downstream users stocking up in large quantities has reduced the inventory pressure of magnesium plants, and prices have slightly increased at one point. After the Spring Festival, with the completion of most downstream stocking, magnesium prices fell again, with this decline being the largest annual drop, and then magnesium prices stabilized. The mainstream price of magnesium metal in Fugu area has dropped to 17300-17500 yuan/ton, and market demand still needs to be boosted.

Second quarter

In mid March, magnesium prices rose for the first time after the Spring Festival, and market confidence slightly recovered. However, insufficient demand led to a further decline in magnesium prices, followed by a bottoming out and rebound. Due to severe losses, some manufacturers in Shaanxi, Inner Mongolia and other places have stopped production, resulting in reduced market supply and stimulating downstream demand. Magnesium prices have remained stable and risen to 18600-18800 yuan/ton. At the end of April, downstream users finished stocking up, demand weakened, and magnesium prices fell back to 18000-18100 yuan/ton. After the May Day holiday, downstream low-priced restocking led to a slight increase in magnesium prices. Subsequently, raw material prices rose, but downstream demand was limited, resulting in slight fluctuations in magnesium prices. At the end of May, the price of silicon iron raw materials rose significantly, driving up the price of magnesium.

Third quarter

Since June, downstream demand has been insufficient, raw material prices have decreased, shipping costs have risen, and external orders have decreased, resulting in a downward pressure on magnesium prices. Although there was an increase in sales volume during the second half of the year due to low prices and price recovery, there was weak demand follow-up, resulting in a further decline in magnesium prices. In early July, magnesium prices slightly increased. At the end of the month, due to some manufacturers resuming production and the market being cautious, transactions were limited, and magnesium prices fell again. The mainstream price in Fugu area dropped to 17600-17700 yuan/ton. From late July to early August, some manufacturers stopped production for maintenance, downstream procurement increased, and magnesium prices rose temporarily to 17900-18000 yuan/ton due to cost support. In mid August, downstream fear of high sentiment intensified, market inquiries decreased, transactions were light, and magnesium prices quickly fell to 17500-17600 yuan/ton.

Fourth quarter

At the end of August and the beginning of September, magnesium prices rose rapidly. In order to maintain market stability, manufacturers raised their prices uniformly, pushing up mainstream prices in the Fugu area. However, downstream demand is weak, shipping costs have been lowered, foreign procurement is scattered, and manufacturers’ shipments are not smooth. The actual transaction price has dropped to 17600-17700 yuan/ton. After the National Day holiday, magnesium prices rose due to market transactions during the holiday period and a slight increase in raw material prices after the holiday. Since mid October, downstream demand has been insufficient, market transactions have decreased, and magnesium prices have continued to fall to 16500 yuan/ton. Although there are favorable policies, it is difficult for demand to increase significantly, and there is no significant change in the supply side. Until the end of the year, the situation of oversupply continued, and magnesium prices fell to around 16000 yuan/ton. The lowest price in recent years.

Magnesium price forecast for 2025:

Raw material end:

In terms of the ferrosilicon market, it is expected that its price will fluctuate within the range of 6000 to 7500 yuan by 2025. The production commencement situation will be mainly affected by the adjustment of profit levels. Therefore, we need to continuously monitor the investment in new production capacity. If there is a lack of macro favorable policies, environmental protection measures for the industry itself, and dual control of energy consumption, it will be difficult for the price of ferrosilicon to achieve significant fluctuations.

Supply and demand side:

The magnesium market is currently facing the problem of weak downstream demand, and prices have mostly remained relatively low. As a result, some manufacturers have carried out routine maintenance operations due to losses. At present, the rotating maintenance of most manufacturers has been basically completed, and the production operation is stable. As the market gradually enters the peak demand season, if there are no other unexpected factors to interfere, the supply of magnesium metal market may increase slightly, and the overall market supply will show a sufficient trend. In the absence of other relevant policy influences, it is expected that the supply of magnesium metal market will remain overall stable by 2025. From the perspective of demand, there will not be a significant change in the downstream demand pattern. Some downstream enterprises in foreign countries have stopped production, resulting in weakened demand and continued weakness on the demand side.

Overall, the supply and demand sides in the magnesium market are in a game with each other. It is highly likely that the magnesium metal market will remain stable by 2025, with a slight rebound in magnesium prices before turning into a narrow range oscillation trend.

According to the Commodity Market Analysis System of Shengyi Society, from January 13th to 17th, the domestic aggregated MDI market operated relatively strongly, with an average price of 18233 yuan/ton at the beginning of the week and 18283 yuan/ton at the end of the week, an increase of 0.27% during the period and a year-on-year increase of 16.45%. The domestic aggregated MDI market saw a slight increase during the week, with ASEAN Wanhua MDI and Wanhua TDI prices set to rise by $200/ton. Boosted by news, the domestic MDI market saw a slight increase, with downstream demand entering the market and mainstream factories prioritizing export orders.

On the supply side, domestic facilities are maintaining stable operation. The 410000 ton/year facility in Jinhu, South Korea is scheduled to undergo maintenance starting from February 9th, lasting for about a month.

On the cost side, raw material pure benzene: Recently, the pure benzene market has seen a slight increase. As of January 17th, the benchmark price of pure benzene in Shengyi Society is 7531 yuan/ton. Raw material aniline: Currently, the domestic aniline market is stable. As of January 17th, the benchmark price of aniline in Shengyi Society is 9075 yuan/ton. The overall impact of aggregating MDI costs is relatively small.

On the demand side, downstream demand is following steadily, and the export market is performing well. As the holiday approaches and logistics is about to shut down, there are more concentrated deliveries.

Future forecast: The current trend of the aggregated MDI market is strong, with slow filling of goods sources and low inventory levels in the market. It is expected that the aggregated MDI market will operate strongly.

According to the Commodity Market Analysis System of Shengyi Society, from January 13th to 17th, MTBE prices fell from 6562 yuan/ton to 5862 yuan/ton, with a price drop of 10.67% during the period, a month on month increase of 5.73%, and a year-on-year decrease of 8.22%. In the early stage, favorable factors such as the rise in crude oil prices and gasoline prices supported a wide upward trend, but there were many speculative factors involved in the price increase. Subsequently, the market returned to rationality, and the domestic MTBE market price fluctuated and fell, with a significant downward trend.

On the cost side, in terms of crude oil: International oil prices have risen, mainly due to favorable factors such as the US Treasury Department announcing new sanctions against Russia, market concerns about increased supply risks, and continued severe cold weather in some parts of the US and Europe, boosting fuel consumption demand. US commercial crude oil inventories have been declining for eight consecutive weeks. As of January 16th, the settlement price of the main Brent crude oil futures contract was $81.29 per barrel.

On the demand side, international crude oil futures have fluctuated upwards, and the market has been active in recent times under the stimulation of positive news. Refineries have raised their prices one after another, and some mid to downstream merchants have made moderate purchases under the buying sentiment. The market buying and selling atmosphere has heated up. Short term MTBE demand is influenced by favorable factors.

Supply side: Short term production may increase. Short term domestic MTBE supply is affected by bearish factors.

As of the close on January 16th, the closing price of the Asian MTBE market has increased by $6.06/ton compared to the previous trading day, with FOB Singapore closing at $760.36-762.36/ton. The closing price of the European MTBE market decreased by $4.75/ton compared to the previous trading day, and FOB ARA closed at $888.74-889.24/ton. The closing price of the MTBE market in the United States decreased by $5.56/ton compared to the previous trading day, and the FOB Gulf offshore price closed at $797.11-797.46/ton (225.07-225.17 cents/gallon).

The forecast for the future market is that terminal inventory will be moderately replenished before the holiday, but manufacturers also face pressure to reduce inventory. MTBE analysts from Shengyi Society believe that the domestic MTBE market is mainly experiencing slight fluctuations.

In the first battle of 2025, alumina is the first to bear the brunt, experiencing consecutive trading days of decline, with the price center falling from 4800 yuan/ton to yesterday’s closing of 3809 yuan/ton. The previous rise was mainly due to the continuous escalation of fundamental tool contradictions and the driving force of financial strength. The recent loosening is due to:

1. Guinea’s aluminum ore supply has returned to normal, and alumina has experienced a rapid decline. Although its impact is limited, this news has stimulated bearish sentiment. It should be noted that the shortage of bauxite supply and the problem of limiting the release of alumina production capacity have been the focus of bullish speculation on alumina since 2024, and this contradiction has almost disappeared in recent market trends;

2. Since December, the continuous decline in overseas alumina prices has been an important reason for the turning point in domestic alumina futures and current prices. Coupled with the high cost pressure of electrolytic aluminum in China, aluminum plants find it difficult to accept high priced alumina, resulting in a significant drop in the average spot price;

3. Recently, a certain alumina plant in Shanxi resumed production, with a production capacity of 1 million tons. The overall production capacity operation rate has fluctuated and rebounded, and the supply has slightly increased. In the context of increasing supply margin, stable domestic demand, and narrowing export window, the social inventory of alumina has reached a turning point, and the tight supply-demand pattern is improving positively.

While alumina is heading south, caustic soda is experiencing the opposite trend, continuing the upward trend from the beginning of the year to the end of 2024, closing at 3194 yuan/ton yesterday. Core driver: The large-scale production of alumina is concentrated in the first half of the year, while the production of caustic soda is more concentrated in the second half of the year, and the production of caustic soda is often delayed due to energy consumption limitations, resulting in a low probability of overproduction. In the long run, after the comprehensive profit recovery, the previously reduced burden enterprises have already increased their burden. If no new equipment is put into operation ahead of schedule, the supply of caustic soda will lack elasticity. The production and stocking of alumina are being realized, and it is necessary to pay attention to the pace and intensity of stocking. Before the loss and production reduction of alumina, caustic soda is still being given more attention.

Zinc prices show a strong trend in 2024

According to the Commodity Market Analysis System of Shengyi Society, in 2024, zinc prices showed a step up trend, with an overall increase of 19.48% in zinc prices. The average zinc price in 2024 was 21660.93 yuan/ton, and the center of gravity of zinc prices in 2024 has significantly shifted upward compared to 2023.

Unlike the low volatility of zinc prices in 2023, zinc prices in 2024 have shown a strong trend under the dual effects of macroeconomic favorable conditions and supply-demand mismatch.

Review of Zinc Market Trends

first quarter

In the early stage, due to macroeconomic pressure, the expectation of the Federal Reserve cutting interest rates continued to be postponed, and market sentiment tended to be pessimistic. Domestic zinc ore supply remains tight, and domestic and foreign processing fees have been successively reduced. After the Spring Festival, downstream consumption gradually rebounded, leading to a low rebound in zinc prices in late February. In March, a domestic lead-zinc mine ceased production, and foreign smelting capacity was also reduced, causing frequent market disturbances and driving zinc prices to continue to rise.

The European Central Bank has raised interest rates for the tenth consecutive meeting in response to inflation, raising the deposit rate from 3.75% to 4%, setting a historic high. The economy is weak, and the zinc market is bearish.

Second quarter

Foreign economic data shows positive trends, and a series of favorable policies have been introduced domestically, leading to increased expectations for market recovery. The tight supply of minerals continues, coupled with frequent maintenance of domestic smelters leading to a decrease in production, providing support for zinc prices due to weak supply side. Although the expectation of interest rate cuts has been postponed and the sentiment in the non-ferrous metal market has weakened, zinc prices have achieved the main increase of the year under the cumulative effect of multiple positive factors in the early stage.

Third quarter

From July to August, both the supply and demand sides showed weakness, and coupled with the economic data of the United States and China not meeting expectations, zinc prices showed a range oscillation pattern. In September, the Federal Reserve unexpectedly implemented a rate cut policy, and actively implemented domestic monetary and fiscal policies. Fundamentally, the tight supply of raw materials at the mining end and the decline in processing fees have triggered domestic smelters to reduce production, resulting in a sustained upward trend in zinc prices

Fourth quarter.

With the dust settled on the US election results, the strong US dollar limited the rebound space of zinc prices, and zinc prices gradually returned to fundamental dominance. Although the supply contradiction was not resolved at the end of the year, the market speculation hotspots had subsided, and coupled with weak demand in the off-season, zinc prices showed a range consolidation trend.

2024 Zinc Ore Status and 2025 Expectations

In 2024, global zinc concentrate production is expected to be approximately 12.11 million tons, a decrease of 1.5% year-on-year, or approximately 200000 tons, marking the third consecutive year of year-on-year decline in global zinc ore production.

Production resumption and increase project

In 2024, the tight supply situation in the zinc ore market will only slightly ease, mainly constrained by multiple factors such as declining ore grades, extreme weather, reduced capital expenditures of mining enterprises, and the continuation of suspended projects. Despite the expectation of resuming production and increasing output, as well as the future large-scale production of zinc mines, the actual import volume of zinc mines in China is still limited during the year. Looking ahead to 2025, the supply of zinc ore is expected to become more relaxed, with projects such as Huoshaoyun Lead Zinc Mine, Hunan Naonaopo Lead Zinc Mine, and Lanping Lead Zinc Mine expected to become the main sources of incremental production, with an estimated capacity increase of about 120000 tons. However, attention should be paid to factors such as safety and environmental protection requirements, ore quality, and mining progress that may lead to actual incremental adjustments, with an estimated actual increase of about 100000 tons.

In addition, it is also necessary to pay attention to factors that affect the actual production of the mining end: declining ore grade, extreme weather effects, decreased capital expenditures of mining enterprises, and continued shutdown of projects

Analysis of Refined Zinc Production

2024

The global refined zinc production in 2024 is 13.78 million tons, a year-on-year decrease of 2%.

From January to November 2024, China’s cumulative refined zinc production was 5.675 million tons, a year-on-year decrease of 5.9% or 357000 tons. It is expected that the domestic production will be 6.16 million tons in 2024, a year-on-year decrease of 6.9% or 460000 tons.

2025

The global refined zinc production is expected to increase slightly by 1.2% year-on-year to 13.94 million tons in 2025. It is expected that the domestic zinc production growth rate will be around 4.3% by 2025, reaching 6.43 million tons.

Zinc demand analysis

Infrastructure and power grid:

Infrastructure and power grid use zinc, which accounts for approximately 33% of zinc demand

According to the data released by the National Bureau of Statistics, from January to October 2024, the national fixed assets investment (excluding farmers) will reach 42322.2 billion yuan, an increase of 3.4% compared with the same period last year. Among them, the total amount of private fixed assets investment was 21277.5 billion yuan, a slight decrease of 0.3% compared with the same period. Within the tertiary industry, infrastructure investment (excluding electricity, heat, gas, and water production and supply industries) increased by 4.3% year-on-year. The investment in water management industry has increased significantly, with a growth rate of up to 37.9%; Investment in the air transportation industry followed closely behind, growing by 19.2%; The investment in railway transportation industry also achieved a growth of 14.5%.

From January to October 2024, the cumulative investment in power grid projects reached 450.2 billion yuan, a year-on-year increase of 20.7%; The planned completion target of State Grid Corporation of China in 2024 may exceed 500 billion yuan, slightly lower than the 520 billion yuan in 2023. Driven by the national policy of building a power system with new energy as the mainstay, the proportion of new energy power generation installed capacity in China has rapidly increased. It is expected that within the next three years, the proportion of distribution end investment in the power grid will exceed 60%. Strengthen the backbone architecture of the power grid and accelerate the development of intelligent distribution networks, thereby continuously promoting the growth of zinc demand in the power industry. In addition, the energy storage field has undoubtedly brought significant growth to the application of zinc in the power industry.

Policy boost, real estate downturn or slowing down:

From January to October 2024, the total construction area of real estate development enterprises’ houses was 7206.6 million square meters, a year-on-year decrease of 12.4%, of which the residential construction area decreased by 12.9%. The newly started and completed areas also decreased by 22.6% and 23.9% respectively, and the residential category also showed a corresponding decline. Despite the impact of real estate data on the production rate of die-casting zinc alloys, the demand for die-casting zinc alloys (especially for car door handle manufacturing) has been boosted by the growth in automobile exports. As a result, the production rate of die-casting zinc alloys remained strong throughout the second half of 2024, reaching its highest point in nearly four years.

Home appliances bring incremental growth to zinc, with an expected slowdown in growth rate by 2025

Home appliances account for 21.5% of zinc consumption

Mainly stimulated by national subsidy policies and the Double Eleven shopping festival, the domestic market not only achieved a significant increase in total volume, but also showed a significant trend of optimizing and upgrading product structure. In terms of exports, in addition to the normal export of seasonal products, some enterprises have planned orders in advance due to the uncertainty of the international trade environment, resulting in a sharp increase in export volume. According to a report released by the National Bureau of Statistics, the national refrigerator production in October 2024 was 8.971 million units, a year-on-year increase of 6.8%; The cumulative production from January to October was 87.276 million units, a year-on-year increase of 8.5%. Looking ahead to 2025, given the expectation of a soft landing in the US economy, the demand for air conditioning exports is expected to decline, but the extent is limited. However, attention should be paid to the red ocean crisis caused by the early overdraft of market demand, and at the same time, the downward trend of the domestic real estate market is expected to slow down, which will relatively reduce its negative impact on the home appliance industry. Overall, it is expected that the demand for household appliances in 2025 will remain basically the same as in 2024, or slightly decrease.

The rapid growth of automobiles (including new energy) continues:

Automobiles account for approximately 18% of zinc consumption

According to data from the China Association of Automobile Manufacturers, in October 2024, China’s automobile production and sales volume were 2.996 million and 3.053 million respectively, with a month on month increase of 7.2% and 8.7%, and a year-on-year increase of 3.6% and 7%, respectively. The cumulative production and sales volume from January to October reached 24.466 million and 24.624 million vehicles, an increase of 1.9% and 2.7% respectively year-on-year. The production growth rate slightly decreased by 0.01 percentage points, while the sales growth rate expanded by 0.36 percentage points.

The rapid growth of the automotive industry has strongly promoted the recovery of zinc oxide production rate. Although automotive sheet is an important application area of galvanized sheet, its market demand is affected by the healthy growth of automobile production and sales. However, due to the weight disadvantage of galvanized sheet, it is mostly used in traditional mid to high end fuel vehicles. Therefore, the current automobile production and sales data has limited boosting effect on the galvanized sheet industry. Looking ahead, with the continuous expansion of the proportion of new energy vehicle production and sales, the market demand for galvanized automotive sheet may gradually decrease.

Market forecast for 2025

In 2024, the tight supply situation in the zinc ore market will only slightly ease, mainly constrained by multiple factors such as declining ore grades, extreme weather events, reduced capital expenditures by mining companies, and continued production shutdowns. Despite the resumption of production and the launch of new large-scale zinc ore projects, the actual import volume of zinc ore in China was still limited during the year. It is expected that the supply of zinc ore will gradually ease from 2025 onwards. Looking ahead to 2025, with the improvement of supply conditions in the mining sector and the resumption of production in overseas mines, processing fees are expected to stabilize and rebound, boosting the production enthusiasm of domestic smelters. Given the conduction time, the domestic refined zinc production is expected to be approximately 6.45 million tons by 2025.

According to the latest customs data, the cumulative import volume of refined zinc from January to October 2024 increased by 23.43% year-on-year to 377600 tons. The import volume is expected to remain high in the fourth quarter, and the annual import volume may exceed 450000 tons. In 2025, the refined zinc production of domestic smelters is expected to significantly increase, thanks to the release of smelting capacity and improvement in raw material supply, which will alleviate the supply pressure in the domestic market and may suppress the import of zinc ingots. It is expected that the import volume will slightly decline. The global zinc ingot surplus is expected to be 180000 tons, including 100000 tons in China and 80000 tons overseas.

The outlook for the zinc consumption market in 2025 is optimistic, and zinc prices may continue the trend of high prices in the first half of the year and falling in the second half.

1、 Trend analysis

According to data from Shengyi Society, copper prices will experience wide fluctuations throughout 2025. The highest point for copper prices in 2024 was 87121.67 yuan/ton on May 20th, and the lowest point was 67996.67 yuan/ton on January 17th, with a maximum amplitude of 28.12%.

2、 Market Review

The annual trend of copper prices can be divided into five stages:

Phase 1 (January March): No significant driving force, copper prices continue to fluctuate and consolidate in a narrow range as in the previous period;

Phase 2 (mid March to the end of May): Macro fund allocation, supply side driven, copper prices hit a historic high;

Phase Three (late May to early August): Expectations of a Federal Reserve interest rate cut fell through, manufacturing PMI in China and the United States declined, high copper prices suppressed downstream demand, and prices rapidly declined;

Phase Four (August to early October): The Federal Reserve initiates interest rate cuts, domestic stimulus policies are frequent, copper demand improves during the Golden September and Silver October periods, and copper prices rebound slightly;

Phase 5 (October to the end of the year): Trump wins the election, the US dollar strengthens, suppresses copper prices, and slightly falls.

Supply side

Domestic copper production capacity and output from 2011 to 2024

According to data, China’s refined copper production in November was 1.133 million tons, a year-on-year decrease of 1.6%. The cumulative production of refined copper (electrolytic copper) from January to November reached 12.451 million tons, a year-on-year increase of 4.6%.

Copper import and export data

According to customs data, the import volume of copper is much larger than the export volume, and the import volume of copper in 2024 is basically the same as that in 2023. The expected import volume of refined copper in China in 2024 is 3.51 million tons, a year-on-year decrease of 0.28%. The expected domestic export volume of refined copper in 2024 is 490000 tons, a year-on-year increase of 75.5%.

LME copper inventory affects copper prices

As shown in the above figure, the comparison between LME copper inventory and copper prices shows that copper prices and inventory are inversely proportional, with LME copper inventory falling and copper prices rising; LME copper inventory rises, while copper prices fall. The judgment of copper prices can be predicted based on LME copper inventory. As of December 31st, LME copper inventory was 271400 tons, up 38.94% from the beginning of the year.

In terms of demand

Copper apparent consumption

As shown in the above figure, according to the statistics of Shengyi Society on the apparent consumption of copper in China in recent years, except for the period from 2015 to 2017 when some manufacturers stopped production and production due to the decline in copper prices, the apparent consumption of copper has decreased. In other years, except for the impact of the pandemic in 2021, the apparent consumption of copper has been increasing year by year. According to data statistics, the apparent consumption in 2024 was 16.4128 million tons, and the annual apparent consumption in 2024 was higher than that in 2023.

Domestic copper terminal consumption is mainly concentrated in industries such as power cables, home appliances, automobiles, and real estate. Among them, power cables account for nearly 37%, buildings account for 21%, household appliances (such as air conditioning and refrigeration equipment) account for 15%, and the automotive industry accounts for 8%.

Power cables:

The growth rate of completed power grid investment and construction from January to October this year exceeded expectations by 20%, far higher than the same period in the past two years. Conservatively, it is expected that the growth rate of power grid investment in 2025 will maintain a 6% growth rate, which will bring a 3% growth boost to overall copper consumption. The investment targets of State Grid 609.2 billion and Southern Power Grid 195.3 billion for the power grid in 2024 will continue to break post epidemic records. It should be noted that the completion rate of power grid investment and construction from January to October has reached 74%, which is higher than the historical average of 70% and close to the high level of 2017. It is expected that the growth rate of copper investment and construction in the domestic power grid will be limited by the end of the year. In addition, the core of State Grid at present and in the future is the dual wheel drive of ultra-high voltage and smart distribution network. It is expected that more incremental cable orders in the future will be related to aluminum and aluminum alloys.

Construction and completion of real estate across the country

The negative growth rate of construction and completion is expected to stabilize, but copper used in construction will still be a drag. This year, the growth rate of completed area in China has decreased much more than expected compared to last year’s high base, while the growth rate of new housing construction has been sluggish and has not improved. The cumulative completed area in the first 10 months of this year decreased by 24% year-on-year, with an annualized decrease of 8.36%. The cumulative newly started area in the first 10 months decreased by 23% year-on-year, with an annualized decrease of 24.5%. Although China further introduced stimulus policies in the third quarter of this year, considering the current sluggish sales of pre-sale housing in the residential sector and the 2-3 year lag in sales of completed real estate companies, even strong stimulus policies have a transmission period of physical tools. Therefore, it is expected that the growth rate of construction area in 2025 will remain at a level of -15% to 25%, which is the same as the negative growth rate in 2024. The neutral estimate is that there will still be a 20% year-on-year negative growth rate for copper used in construction (excluding household appliances), which will drag down overall consumption by about -4.4%.

The home appliance industry: In 2024, home appliance consumption exceeded expectations, mainly due to the overseas replenishment cycle and China’s trade in subsidy policy. Under domestic and foreign policies and cycles, the production growth rates of air conditioners, refrigerators, freezers, and washing machines in China reached 8.2%, 8.5%, 15.2%, and 6.7% respectively in the first ten months of this year. Considering the current high inventory of air conditioners in China and the fact that the boost to the home appliance industry this year is mainly related to policy support, the sustainability of industry recovery is expected to be limited. It is expected that the growth rate of home appliance consumption will slightly decline to 5% by 2025, and it will still maintain strong resilience in the copper consumption field.

Automobile production

In terms of automobiles, the growth rate of China’s automobile production in the first ten months of 2024 was only 3%, far lower than the cumulative year-on-year growth rate of the same period from 2021 to 2023, mainly due to the current high base of China’s automobile production. After reaching a peak of 33% in 2021, the penetration rate of China’s automobile production has fallen to 32% in 2022-2023. Combined with the trend of slowing down the growth rate of production in 2024, it is expected that the penetration rate of China’s automobile production will continue to fall to 31% to 32% in 2024.

3、 Factors influencing 2024

Add crude copper smelting capacity by 2025

By 2025, it is expected that an additional 1.27 million tons of crude copper smelting capacity will be released globally, which is a decrease from the 1.68 million tons of new capacity in 2024. However, the conflict between mining and metallurgy will continue. This year, global smelting capacity is still concentrated in Asia, with China contributing 54% of the increase and Indonesia contributing nearly 30% of the increase. In 2025, the global crude refining capacity growth rate will slow down, and China’s contribution will decline to 32%, while the Kamoa project in the Democratic Republic of Congo will contribute 38% of the increment.

The peak period of mining processing fees has passed

Without considering whether the Panama copper mine will resume production or not, it is expected that the global copper mine production will increase by about 780000 tons in 2025, a slight decrease from last year, indicating that the tight mining situation will continue. Global copper mining project reserves are gradually depleting, with few new projects and limited ore supply. Global copper production is expected to decrease by 0.3% in 2024, and although it is expected to increase by 1.2% in 2025, the increment is far lower than the newly added smelting capacity, and some copper mines are experiencing production cuts. Although new and old mines are resuming production under the stimulation of high copper prices, the tight supply situation is difficult to fundamentally reverse, which will fundamentally support copper prices.

Copper mine supply remains tight in 2025

Without considering whether the Panama copper mine will resume production or not, it is expected that the global copper mine production will increase by about 780000 tons in 2025, a slight decrease from last year, indicating that the tight mining situation will continue.

Global copper mining project reserves are gradually depleting, with few new projects and limited ore supply. Global copper production is expected to decrease by 0.3% in 2024, and although it is expected to increase by 1.2% in 2025, the increment is far lower than the newly added smelting capacity, and some copper mines are experiencing production cuts. Although new and old mines are resuming production under the stimulation of high copper prices, the tight supply situation is difficult to fundamentally reverse, which will fundamentally support copper prices.

The utilization rate of smelting capacity has decreased

Due to the reduction in ore supply and the relative excess investment in smelting capacity in the past, the utilization rate of smelters has dropped below 70%, increasing smelting costs and limiting the rate of production increase for refined copper, thereby supporting copper prices.

Copper concentrate processing fees decrease

Due to tight supply, copper concentrate processing fees are expected to significantly decrease by 2025, possibly reaching a 15 year low. Some smelters are facing profit pressure and may delay production or maintenance, reducing market supply and supporting copper prices.

Demand growth in the field of new energy

The new energy vehicle industry continues to develop, and it is expected that the global sales growth rate of new energy vehicles will be around 23.85% by 2025, which will bring a new increase in copper demand of 656000 tons, and the growth rate may slightly decrease. In addition, the demand for copper in new energy sectors such as photovoltaics and wind power is steadily increasing, providing strong support for copper prices.

Macro policies stimulate demand

Looking forward to 2025, there is great uncertainty for the Federal Reserve to cut interest rates. The European Central Bank and the Bank of Japan will gradually enter a wait-and-see state, and the People’s Bank of China may implement moderately loose monetary policy. The future trend of the US dollar may remain high, putting some pressure on copper prices in the external market. The RMB exchange rate may be weak, and copper prices in the domestic market may continue to be stronger than those in the international market.

4、 Summary and prediction

2024 is a turbulent year for the copper market, with significant fluctuations and a wide range of trends. The second quarter reached a historic high. Overall, the global copper market is in a pattern of oversupply in 2024. This is also the fundamental reason why copper prices cannot be sustained after a rapid rise.

Looking ahead to 2025, the global copper market supply and demand pattern will gradually shift from oversupply this year to supply-demand balance. The significant decrease in smelting costs (TC/RC) has put significant operational pressure on a large number of domestic smelters, and the tight supply of copper concentrate will begin to constrain the production of electrolytic copper. The downstream demand growth rate is expected to accelerate compared to 2024, and China and the United States are expected to initiate active inventory replenishment. Domestic power grid investment, household appliance consumption, and new energy vehicle production are all expected to maintain high growth rates. Overseas demand is expected to gradually recover with further interest rate cuts by global central banks, and global copper inventory levels are expected to decrease year-on-year.

Copper prices are expected to maintain high levels in 2025, but it is difficult to break out of the trend market. The annual volatility is expected to be smaller than in 2024, and the low point for the year is expected to be higher than in 2024, but the high point is difficult to break through. In the first half of the year, due to factors such as tight supply, peak demand season, and policy expectations, copper prices may show a fluctuating upward trend and are expected to hit above $10000/ton. In the second half of the year, as the risk of a US economic downturn increases and market demand relatively weakens after some peak demand periods, copper prices may face some downward pressure. However, due to the continued tight supply situation, the possibility of a significant drop in copper prices is relatively small, and it is expected to fluctuate and adjust within a high range.

Under the push up of costs, the domestic PTA spot market has shown an upward trend since January. According to the Commodity Market Analysis System of Shengyi Society, as of January 13th, the average price of PTA market in East China was 4963 yuan/ton, an increase of 3.63% from the beginning of the month.

The US Treasury Department has imposed comprehensive sanctions on a European country’s oil industry, intensifying market concerns about disruptions in its oil supply. International crude oil prices have risen sharply. As of January 10th, the settlement price of the main contract for WTI crude oil futures in the United States was $76.57 per barrel, and the settlement price of the main contract for Brent crude oil futures was $79.76 per barrel. In addition, with the announcement of production cuts and shutdowns in multiple PX facilities both domestically and internationally, PX has opened up wide and high. Both crude oil and PX prices have strengthened, and rising costs have boosted the PTA market.

In terms of self supply, Jiaxing Petrochemical’s 1.5 million ton PTA plant underwent maintenance on December 12th and will restart on January 13th, 2025. Rolex’s 1.25 million tons will undergo maintenance around January 13th. The current spot market supply is still sufficient, and the industry operating rate is around 83%.

Downstream polyester production is around 84%, and multiple polyester units have announced official shutdown and maintenance plans, resulting in a short-term decrease in polyester production. As the Spring Festival approaches, the operating rate of terminal looms has declined, and the stocking phase has come to an end.

Business analysts believe that the factor of rising costs dominates the PTA market, but its sustainability is highly uncertain, and it is expected that the subsequent increase in PTA prices will be limited.

According to the Commodity Market Analysis System of Shengyi Society, after New Year’s Day, the market for hydrogen peroxide continued to weaken, with a slight decrease in prices. On January 1st, the average market price of hydrogen peroxide was 700 yuan/ton, and on January 10th, the average market price of hydrogen peroxide was 696 yuan/ton, a decrease of 0.48% in price.

Loose supply, weak decline in hydrogen peroxide

After New Year’s Day, the hydrogen peroxide market remained weak and mainly consolidated. Mainly due to manufacturers shutting down for maintenance, inventory prices remain stable.

The terminal caprolactam, papermaking, and printing industries have seen a decline in the purchase of hydrogen peroxide, resulting in weak demand. The mainstream price in the hydrogen peroxide market in Shandong region is around 650 yuan/ton; The mainstream price in the hydrogen peroxide market in Hebei region is 670 yuan/ton; The mainstream price for hydrogen peroxide in the Anhui region is 780 yuan/ton.

Business Society’s hydrogen peroxide analyst believes that as the end of the year approaches, demand from terminal manufacturing manufacturers will decline, and the hydrogen peroxide market will continue to operate weakly in the future.