海日生残夜，曲径待深行

1. Report Industry Investment Rating - Zinc: Bearish [5] 2. Core Viewpoints of the Report - In the second half of the year, the supply is expected to continue to be released, but there may be disruptions. The demand side is likely to face pressure, and the traditional peak season may see a temporary improvement. The center of Shanghai Zinc is expected to decline both year - on - year and quarter - on - quarter. The zinc fundamentals may remain weak, suppressing the upside space of zinc prices, but certain factors will limit the downside range [1][2][3]. 3. Summary by Relevant Catalogs 3.1 Market Review - In H1 2025, zinc prices mainly showed a step - by - step downward trend. The decline of Shanghai Zinc main contract exceeded 13%, and that of LME Zinc main contract exceeded 9%. In the second half of the year, questions remain about the operation of the mining and smelting cycle, the expected change in social inventory, and trading opportunities for zinc ingots [15]. 3.2 Supply Side 3.2.1 Mine End: Temporary Mine Looseness Confirmed, Still Need to Be Vigilant Against Disturbances - In H1 2025, overseas mines produced relatively smoothly, while domestic mines slightly underperformed expectations. The annual overseas mine increment is slightly revised down from 430,000 to 380,000 tons, and the domestic zinc mine increment is revised down from 80,000 to 30,000 tons. In the second half of the year, the mine looseness cycle will continue, but the probability of overseas zinc mine disturbances may increase, and domestic zinc mines may consume raw materials but should not be in short supply [18][27][35][46]. 3.2.2 Smelting End: The Pattern of East - Rising and West - Falling May Intensify - From January to April 2025, global refined zinc production decreased year - on - year, while China's production increased slightly. Overseas smelters are restricted by the record - low Benchmark and have started to cut production, while domestic smelting capacity is gradually being released. In the second half of the year, overseas zinc smelters may continue to cut capacity actively, and the space for internal - external positive spreads may be larger than expected. The upward trend of zinc concentrate TC may have setbacks, and smelter profits may be under pressure [48][52][66]. 3.3 Demand Side 3.3.1 Initial - Stage Demand: Obvious Sector Differentiation, Marginal Weakening of Restocking Momentum - In H1 2025, the overall initial - stage downstream start - up increased year - on - year. After the Spring Festival, the start - up was weak, and then improved with the recovery of terminal demand and the fermentation of the export - rush effect. After June, downstream orders gradually weakened. The restocking of downstream raw materials may be limited in the future [75][80]. 3.3.2 Infrastructure Demand in the Peak Season May Improve Year - on - Year, and the Construction Sector Will Continue to Drag - In H1 2025, infrastructure support was relatively stable. The issuance of new special bonds was basically in line with the plan, and the debt - replacement bonds were issued in advance. The actual operation of infrastructure projects showed that the investment growth rate increased year - on - year but decreased quarter - on - quarter. The construction sector may continue to drag down zinc demand [88][91][98]. 3.3.3 The Growth Rate of Durable Consumer Goods Demand Will Slow Down Both Year - on - Year and Quarter - on - Quarter in the Second Half of the Year - In H1 2025, the automobile and home appliance markets grew steadily under the influence of policies and the export - rush effect. In the second half of the year, the growth rate may slow down due to factors such as the weakening of domestic and external demand [101][109]. 3.3.4 Export Demand: Likely to Face Pressure - Overseas demand is expected to recover, but there may be regional differentiation. The export of initial - stage processed products increased significantly in H1 2025, but in the second half of the year, exports may face pressure due to factors such as anti - dumping and the end of the export - rush effect [117][120][122]. 3.4 Inventory Side - In H1 2025, LME inventory generally decreased, and domestic social inventory was at a historically low level. In the second half of the year, social inventory may gradually increase in the first half of Q3 but is limited by factors such as alloying, downstream restocking, and direct factory - to - customer delivery, and may remain at a relatively low level [132][136]. 3.5 Mining - Smelting Balance and Zinc Price Outlook - The mining - smelting cycle can be divided into two stages. Currently, stage one has not fully ended, and it is unlikely to pre - trade stage two. Zinc prices may be suppressed by weak fundamentals but limited in the downside range by certain factors. Shanghai Zinc may show short - term pulse - type declines during the long - term downward trend [139][140]. 3.6 Investment Suggestions - In the second half of the year, the supply is expected to be released, but there may be disruptions. The demand side is likely to face pressure. The reference range for Shanghai Zinc is [19,900, 23,000], and that for LME Zinc is [2,350, 2,750]. In terms of strategies, it is recommended to focus on short - selling opportunities on rallies, and for the industrial side, selling hedging is appropriate. Pay attention to positive spreads in the long - term for monthly spreads and mid - term internal - external positive spreads when the structure is suitable [144][146].