Report Title - "Excess Gradually Appears, Prices Under Pressure, Low Inventory Provides Structural Strategies - 2025 Zinc Futures Semi - annual Market Outlook" [1] Report Industry Investment Rating - Not provided in the content Core Viewpoints - Based on the excess pattern of zinc elements, zinc prices in the second half of 2025 may be high at first and then low. The main operating range of SHFE zinc is estimated to be 20,000 - 23,000 yuan/ton, and that of LME zinc is 2,400 - 2,700 US dollars/ton [2][79]. - Supply - side contradictions will continue to dominate prices. As profit repair drives the restart of high - cost mines and new and expanded mines realize increments, the loosening of zinc ore will continue to be transmitted to smelting volume expansion, and the supply pressure of zinc ingots will gradually emerge, causing prices to fall from high levels [2][79]. - Low inventory levels may limit the smooth decline of prices. Attention can be paid to inter - period positive spreads during traditional consumption peak seasons and internal - external reverse spreads [2][79]. Summary by Directory 1. 2025 H1 Zinc Price Trend Review - In H1 2025, both domestic and overseas zinc prices showed a step - by - step downward trend. Macro factors had a great impact on price elasticity, monthly spreads, and internal - external ratios [7]. - At the beginning of the year, the liquidity risk of internal and external positions was lifted, premiums were reversed, and some funds priced in the annual supply increment expectation, causing zinc prices to fall continuously from the 25,000 yuan/ton mark [7]. - On February 1, 2025, Trump signed an executive order to impose tariffs, which led to a decline in zinc prices during the Spring Festival. Then the tariff policy was postponed, and market sentiment recovered [7]. - From February to March, zinc prices were in a narrow - range shock pattern due to weak supply and demand [7]. - In early April, zinc prices fell again due to the unexpected intensity of US tariffs, reaching the lowest point so far [7]. - Since mid - April, zinc prices gradually returned to fundamental pricing. Low inventory and supply increment expectations led to a tangled price consolidation [8]. 2. Supply - side As Expected to Increase While Demand Remains Stable, Supply - Demand Excess Gradually Appears 2.1 Zinc Ore Profit Recovery Brings Restart and New Expansion, Transmitted to Smelter Increment - The increase in mine profits drives the restart of high - cost mines. As of Q1 2025, the 90 - percentile cost line of zinc ore is around 2,000 US dollars/ton, and the mine profit margin has reached 46% [19]. - Expansion projects are releasing production capacity in an orderly manner. It is initially estimated that the zinc ore increment in 2025 is 350,000 tons, considering various factors [23]. - Domestic smelters have sufficient raw material inventory, good profits, and production capacity increments, with a clear supply increment expectation. However, the smelting increment from mid - year to Q3 may limit the upward trend of TC [24]. - Overseas smelters are more sensitive to costs and may reduce production. This will affect the internal - external fundamentals and bring internal - external structural arbitrage opportunities [36]. 2.2 Domestic Consumption is Expected to Remain Stable, Overseas Slightly Increase - The real estate sector is expected to continue to drag down zinc consumption by - 18% this year, but the marginal impact of the reduction is decreasing year by year as its proportion in zinc consumption has declined significantly [40]. - The investment structure of infrastructure has changed, and the growth rate of zinc consumption in infrastructure is expected to be about 5% [49]. - In the United States, zinc consumption is expected to continue to increase positively. India's zinc demand is expected to expand at a growth rate of over 5% [52][56]. 3. Multiple Factors Cause a Gap between Apparent Demand and Actual Consumption, Pay Attention to the Term Strategy Guided by Low Visible Inventory - Zinc price fluctuations affect downstream replenishment willingness, which is one of the reasons for the gap between actual demand and apparent demand. The correlation coefficient between downstream raw material inventory and zinc prices is - 0.6 [61]. - The expansion of smelter - integrated zinc alloy production capacity, the increase in the proportion of factory - pickup and direct - delivery, and the cost of social warehouse delivery and pickup are the reasons for the low social inventory level [63]. - Low inventory levels may become the norm in the future, which can provide support for the term structure, especially during the destocking period of traditional consumption peak seasons [71]. 4. Conclusion and Investment Outlook - In 2025, there is an excess of zinc ingots in China. The main operating range of SHFE zinc in the second half of 2025 is estimated to be 20,000 - 23,000 yuan/ton, and that of LME zinc is 2,400 - 2,700 US dollars/ton [76][78]. - The investment outlook includes short - selling on rallies or buying put options for single - side trading, inter - period positive spreads, and internal - external reverse spreads during the domestic consumption peak season [2][79].