Fundamental long short game, zinc price consolidation in mid month

Zinc price range fluctuated and consolidated in mid July

According to the Commodity Market Analysis System of the Business Society, as of July 19th, the zinc price was 20292 yuan/ton, a decrease of 0.27% compared to the fluctuating zinc price of 20346 yuan/ton on July 9th. There is no upward support for the fundamentals of the zinc market, and the zinc price range fluctuated and consolidated in mid July.

Long Short Game in Zinc Market

The US CPI for June, announced in July, only increased by 3% year-on-year, lower than the market estimate of 3.1%. The unexpected decline in CPI data has led to a decline in the Federal Reserve’s expectation of aggressive interest rate hikes. As of July 13, the U.S. Dollar Index had fallen for six consecutive trading days. The U.S. Dollar Index fell, and the non-ferrous metal market was strong.

Before the Federal Reserve’s interest rate hike in July came to fruition, macroeconomic sentiment in the market was fluctuating. Traders believed that July would see a 25 basis point interest rate hike as scheduled, while the US dollar raised interest rates, weakening the non-ferrous metal market. On July 18th, LME zinc inventory increased by over 10000 tons, and LME zinc inventory increased to 80375 tons, breaking a new high since the end of June. The spot circulation is relatively loose, coupled with the continued impact of imported sources of goods. In July and August, some smelters on the supply side will enter the maintenance period, which may bring about significant supply reductions in August. Zinc smelting processing costs will rise, and the decrease in zinc smelting production will be limited. At the same time, imported zinc will also provide a certain supplement to the supply side, and the zinc market supply side may maintain a relatively loose supply, resulting in a bearish zinc market situation.

Future Market Forecast

According to data analysts from Business Society, macroeconomic sentiment is fluctuating, and strong support for non-ferrous metals is insufficient. LME zinc inventory has increased significantly, and domestic zinc supply is limited. The zinc market has sufficient supply. In the future, strong supply and weak demand will be the basic trend for a considerable period of time, and it is expected that zinc prices will consolidate weakly in the future.