Report Industry Investment Rating - The industry investment rating is weak [3] Core Viewpoints of the Report - The logic of marginal increase in mine supply is gradually being realized, and the inventory of zinc concentrates at smelters and ports is relatively abundant. After some smelters resume production in May, the surplus logic may become more obvious [6] - The consumption has entered the traditional off - season, and the hedging effect of rush - export orders is limited. The downstream galvanizing sector's开工率 has decreased significantly, and downstream buyers are cautious due to high prices [6] - The expected increase in long - term supply and imports may confirm the inflection point of social inventory. The zinc market is expected to remain weak in the medium and long term. The spread between near - term contracts is under pressure to converge, and lending can be held. Long - short positions between domestic and foreign zinc prices can continue to be held [6] Summary by Directory 1. Market Data Summary - **Price and Price Change**: The closing price of SHFE zinc main contract last week was 22,500, with a weekly increase of 1.40%, and the closing price of last night's session was 22,425, with a decline of 0.33%. The closing price of LmeS - zinc3 last week was 2,686, with a weekly increase of 1.90% [7] - **Trading Volume and Open Interest Changes**: The trading volume of SHFE zinc main contract last Friday was 118,189, a decrease of 21,828 compared to the previous week, and the open interest was 94,346, a decrease of 24,824. The trading volume of LmeS - zinc3 was 5,141, a decrease of 1,226, and the open interest was 224,623, an increase of 11,453 [7] - **Inventory Changes**: SHFE zinc warrant inventory increased by 272 to 2,175; SHFE total zinc inventory decreased by 751 to 46,351; social inventory increased by 3,000 to 86,300; LME zinc inventory decreased by 6,125 to 164,200; bonded area inventory decreased by 500 to 7,100 [7] 2. Industry Chain Vertical and Horizontal Comparison - **Inventory**: Zinc ore inventory has rebounded to a high level, while zinc ingot's visible inventory is relatively low [9] - **Profit**: Zinc ore profit is at the forefront of the industrial chain, and smelting profit is at a medium - high level. Mining enterprise profit is stable in the short term and at a historical medium level; smelting profit has recovered to a historical medium level; galvanized pipe enterprise profit is stable at a medium - low level compared to the same period [11][12] - **Operating Rate**: Zinc smelting operating rate has recovered to a high level, while downstream operating rate is at a historically low level. Zinc concentrate operating rate has rebounded to a historical medium level; refined zinc monthly operating rate has rebounded to a high level in the same period; downstream galvanizing and die - casting zinc operating rates have decreased and are at historically medium - low levels [13][14] 3. Trading Aspects - **Spot**: Spot premium has slightly declined from a high level. Overseas premium is relatively stable, with a slight increase in Antwerp, and LME CASH - 3M still shows a C structure [16][17] - **Spread**: SHFE zinc shows a B structure in the near - term and is relatively flat in the far - term [19] - **Inventory**: The inventory shows a downward trend, and the open interest - to - inventory ratio is relatively high. LME inventory is mainly concentrated in Singapore. The total LME inventory has decreased in the short term and is at a historical medium level. LME off - warrant inventory is related to CASH - 3M [20][30] - **Futures**: The domestic open interest is at a relatively high level compared to the same period in history [33] 4. Supply - **Zinc Concentrate**: Zinc concentrate imports are at a high level, domestic zinc ore production is at a medium - low level, and the processing fees for domestic and imported ores have rebounded. The arrival volume of zinc ore at ports is at a medium - high level, and smelter raw material inventory is abundant and at a historical high level in the same period [37][38] - **Refined Zinc**: Smelting profit has marginally recovered, and smelting output has also marginally recovered. Refined zinc imports are at a historical medium level [39][42] 5. Zinc Demand - **Refined Zinc Consumption**: Refined zinc consumption is basically the same as the same period last year [47] - **Downstream Operating Rate**: The monthly operating rate of downstream industries has slightly recovered, and most are at historically medium - low levels compared to the same period [50] - **Terminal Demand**: The real estate market remains at a low level, while the power grid shows structural growth [58] 6. Overseas Factors - The report provides data on European electricity prices, natural gas futures prices, and EU carbon quota prices, as well as the profitability of zinc smelters in some European countries [60]

1. Report Industry Investment Rating - The report gives a weak rating to the zinc industry [3] 2. Core Viewpoints - With the resumption of mines and the gradual implementation of new and expanded production capacities, the zinc concentrate processing fee is expected to rise steadily. However, the increase in smelting start - up rate will suppress the upward slope of TC. The top of TC in the second quarter may be around 4000 yuan/ton. Currently, smelter profits have significantly recovered, and the overall output still has the expectation of further increase [6]. - Domestic social inventory is positively correlated with zinc prices, and downstream raw material inventory is significantly negatively correlated with zinc prices. After the zinc price drops rapidly, downstream enterprises actively replenish inventory at low prices, but it is not driven by actual terminal orders. Domestic downstream orders show that domestic demand is relatively stable, and most overseas demand rush - export orders are less than the previous round. It is expected that the apparent consumption will peak and decline after April [6]. - The downstream demand for further replenishment is limited. The fundamentals are difficult to drive a sharp rebound in zinc prices. In the short term, after shock adjustment, a weak trend should be considered. The Back structure in the far - end may converge, and the long - short ratio of domestic and foreign zinc prices is appropriate, but structural losses need to be noted. Pay attention to the phased trading opportunities brought by tariff negotiations and implementation [6] 3. Summary by Directory 3.1 Industry Chain Vertical and Horizontal Comparison - **Inventory**: Zinc ore inventory has returned to a high level, while zinc ingot explicit inventory is low. Zinc ore to - port volume is at a high level, and smelter raw material inventory is abundant [9][40] - **Profit**: Zinc ore profits are at the forefront of the industry chain, and smelting profits have significantly recovered. Mine enterprise profits are stable in the short term, smelting profits have recovered, and galvanized pipe enterprise profits are stable at a relatively low level in the same period [11] - **Start - up Rate**: The smelting start - up rate has recovered to a high level, while the downstream start - up rate is at a relatively low level in history. Zinc concentrate start - up rate has declined slightly, refined zinc monthly start - up rate has increased, and downstream galvanizing and die - casting zinc start - up rates have marginally recovered [13] 3.2 Trading Aspect - **Spot**: Spot premiums have fallen from high levels, and overseas premiums are relatively stable. The LME CASH - 3M still shows a C structure, and the near - end of SHFE zinc shows a B structure, while the far - end is relatively flat [17][19][21] - **Inventory**: Inventories are showing a downward trend, and the position - to - inventory ratio is relatively high. LME inventory is mainly concentrated in Singapore, with a short - term increase and at a medium level in the same period in history. The off - warrant inventory is related to CASH - 3M. Bonded area inventory is stable, and the total global zinc explicit inventory has declined. The domestic market's position is at a relatively high level in the same period in history [26][31][34] 3.3 Supply - **Zinc Concentrate**: Zinc concentrate imports are at a high level, domestic zinc ore production is at a medium level, and the processing fees of domestic and imported ores have increased. The ore to - port volume is high, and smelter raw material inventory is abundant [38][40] - **Refined Zinc**: Smelting profits have marginally recovered, and smelting output has marginally increased. Refined zinc imports are at a medium - high level in history [41][44] 3.4 Zinc Demand - **Consumption**: Refined zinc consumption is basically the same as the same period last year [49] - **Downstream**: Downstream start - up rates have marginally recovered and are at a medium - low level in the same period in history. Downstream raw material and finished product inventories show different trends [50][52] - **Terminal**: The power grid shows structural incremental demand [60] 3.5 Overseas Factors - European power prices, natural gas prices, and carbon prices show different trends, which affect the profitability of zinc smelters in different countries [62]