Report Industry Investment Rating - The report gives a neutral rating for the zinc industry [2] Report's Core Viewpoint - Zinc supply is decreasing while consumption remains stable, and there is still support below the price [2] - Domestic inventory is continuing to decline, and the operating rate of galvanizing has dropped [3] Summary by Relevant Catalogs 1. Market Performance - The closing price of SHFE Zinc main contract last week was 22,425, with a weekly increase of 0.13%; the closing price of the night session yesterday was 22,470, with a night - session increase of 0.20%. The closing price of LmeS - Zinc 3 last week was 3,051, with a weekly increase of 1.97% [6] 2. Industry Chain Vertical and Horizontal Comparison Inventory - Zinc ore, smelter finished products have declined from high levels, and the visible inventory of zinc ingots has decreased [9] Profit - Zinc ore profits are at the forefront of the industry chain, and smelting profits are at a historical median level [11] Operating Rate - The smelting operating rate has decreased, and the downstream operating rate is at a historically low - to - medium level [13] 3. Trading Aspect Spot - The spot premiums in Guangdong and Tianjin have weakened. Overseas premiums have shown differentiation this week, with the Singapore premium remaining stable and LME CASH - 3M strengthening significantly [17][18] Spread - SHFE Zinc maintains a C structure, but there are certain changes in the far - end [20] Inventory - This week, there has been a slight reduction in inventory, and the position - to - inventory ratio has continued to decline. LME inventory is mainly concentrated in Singapore, with a significant increase in total LME inventory, a large decrease in the cancelled warrant ratio to a historical low. The bonded area inventory has decreased slightly this week, and the total global visible zinc inventory has increased slightly [24][30][32] Futures - The domestic long - position volume is at a historical median level for the same period [33] 4. Supply Zinc Concentrate - Zinc concentrate imports have dropped significantly, domestic zinc ore production has increased, the processing fee for imported ore has decreased this week, and the processing fee for domestic ore has been significantly reduced. The arrival volume of ore at the port is at a high level, and the smelter's raw material inventory has decreased [36][37] Refined Zinc - Smelting output has declined and is at a historically high level for the same period. The smelter's finished product inventory has decreased and is at a historically high level for the same period. Zinc alloy production is at a high level [44] 5. Zinc Demand - The consumption growth rate of refined zinc is positive. The monthly downstream operating rate has slightly decreased, mostly at a historically low - to - medium level for the same period. The real estate market remains at a low level, and the power grid shows structural increments [49][52][68] 6. Overseas Factors - The European Continental benchmark Dutch natural gas futures price, the ICE EU carbon quota main contract price, and electricity prices in the UK, Spain, Italy, Germany, and France are presented in the report, along with the profit and loss of zinc smelters in these countries [70][71][73]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The fundamentals of the zinc market are mixed, with short - term support at the bottom. It is expected that Shanghai zinc will fluctuate at a high level, and attention should be paid to the range of 22,300 - 22,600 yuan/ton [7]. Summary by Directory 1. Week - to - Week Highlights - **Market Review**: This week, the main contract of Shanghai zinc fluctuated and adjusted, with a weekly increase of 0.13% and an amplitude of 1.43%. As of the end of this week, the closing price of the main contract was 22,425 yuan/ton [7]. - **Market Outlook**: - **Macro - level**: The Price Department of the National Development and Reform Commission organized a symposium on the cost determination of disorderly price competition. In October, the profits of industrial enterprises above designated size in China decreased by 5.5% year - on - year, while the manufacturing and power sectors grew rapidly in the first 10 months [7]. - **Fundamentals**: Upstream, the import volume of zinc ore declined, and the loss of importing zinc concentrates in China widened. Domestic smelters started winter raw material reserves and preferred domestic zinc concentrates, leading to a significant drop in processing fees and a contraction in smelter profits. Overseas supply remained tight, and the export window was open. On the demand side, the downstream market was entering the off - season, with the real estate sector dragging down, and the infrastructure and home appliance sectors weakening, while the automotive sector had some bright spots. Downstream buyers purchased on demand at low prices [7]. - **Technical - level**: The position decreased while the price adjusted, and both long and short positions were cautious. Attention should be paid to the support of MA60 [7]. 2. Futures and Spot Markets - **Price Fluctuation**: As of November 28, 2025, the closing price of Shanghai zinc was 22,425 yuan/ton, up 30 yuan/ton (0.13%) from November 21, 2025. As of November 27, 2025, the closing price of LME zinc was 3,022 US dollars/ton, up 18.5 US dollars/ton (0.62%) from November 21, 2025 [10]. - **Net Position of Top 20 in Shanghai Zinc**: As of November 28, 2025, the net position of the top 20 in Shanghai zinc was 8,558 lots, an increase of 1,085 lots from November 21, 2025. The position volume of Shanghai zinc was 188,919 lots, a decrease of 6,325 lots (3.24%) from November 21, 2025 [14]. - **Price Spreads**: As of November 28, 2025, the aluminum - zinc futures spread was 815 yuan/ton, a decrease of 240 yuan/ton from November 21, 2025. The lead - zinc futures spread was 5,335 yuan/ton, an increase of 105 yuan/ton from November 21, 2025 [18]. - **Spot Premiums**: As of November 28, 2025, the spot price of 0 zinc ingots was 22,360 yuan/ton, a decrease of 120 yuan/ton (0.53%) from November 21, 2025. The spot premium was 45 yuan/ton, an increase of 40 yuan/ton from the previous week. As of November 27, 2025, the spread between the near - month and 3 - month LME zinc was 165.44 US dollars/ton, an increase of 30.69 US dollars/ton from November 20, 2025 [24]. - **Inventory**: As of November 27, 2025, the LME refined zinc inventory was 50,800 tons, an increase of 4,725 tons (10.26%) from November 20, 2025. As of November 28, 2025, the Shanghai Futures Exchange refined zinc inventory was 95,916 tons, a decrease of 4,431 tons (4.42%) from the previous week. As of November 27, 2025, the domestic refined zinc social inventory was 140,600 tons, a decrease of 19,000 tons (11.9%) from November 20, 2025 [27]. 3. Industry Situation - **Upstream - Zinc Ore**: In September 2025, the global zinc ore output was 1.0666 million tons, a month - on - month decrease of 2.29% and a year - on - year increase of 6.15%. In October 2025, the import volume of zinc ore concentrates was 340,863.41 tons, a month - on - month decrease of 32.48% and a year - on - year increase of 3.28% [33][34]. - **Supply - End - Global Refined Zinc**: According to WBMS, the global refined zinc market was in short supply. In September 2025, the global refined zinc output was 1.1952 million tons, a year - on - year increase of 85,800 tons (7.73%); the consumption was 1.1749 million tons, a year - on - year increase of 13,900 tons (1.2%); and there was a surplus of 20,300 tons, compared with a deficit of 51,600 tons in the same period last year [35][39]. - **Supply - End - Refined Zinc Production**: In October 2025, the zinc output in China was 665,000 tons, a year - on - year increase of 15.7%. From January to October, the cumulative zinc output was 6.184 million tons, a year - on - year increase of 8.5% [43]. - **Supply - End - Refined Zinc Export**: In October 2025, the import volume of refined zinc was 18,836.76 tons, a year - on - year decrease of 67.39%; the export volume was 8,518.67 tons, a year - on - year increase of 3824.82% [46]. - **Downstream - Galvanized Sheets**: From January to October 2025, the inventory of galvanized sheets (strips) of major domestic enterprises was 919,400 tons, a year - on - year increase of 16.85%. In October 2025, the import volume of galvanized sheets (strips) was 23,800 tons, a year - on - year decrease of 48.74%; the export volume was 328,100 tons, a year - on - year increase of 14.57% [49][50]. - **Downstream - Real Estate**: From January to October 2025, the new housing construction area was 490.6139 million square meters, a year - on - year decrease of 19.87%; the housing completion area was 348.61 million square meters, a year - on - year decrease of 16.31%. The funds in place for real estate development enterprises were 7.885278 trillion yuan, a year - on - year decrease of 9.7%, among which personal mortgage loans were 1.0834 trillion yuan, a year - on - year decrease of 12.8% [55][56]. - **Downstream - Infrastructure**: From January to October 2025, the infrastructure investment increased by 1.51% year - on - year [62]. - **Downstream - Home Appliances**: In October 2025, the refrigerator output was 8.788 million units, a year - on - year decrease of 6%. From January to October, the cumulative refrigerator output was 89.959 million units, a year - on - year increase of 0.9%. In October 2025, the air - conditioner output was 14.204 million units, a year - on - year decrease of 13.5%. From January to October, the cumulative air - conditioner output was 230.344 million units, a year - on - year increase of 3% [64]. - **Downstream - Automobiles**: In October 2025, the sales volume of Chinese automobiles was 3,322,094 units, a year - on - year increase of 8.82%; the output was 3,358,716 units, a year - on - year increase of 12.09% [68].

Summary of Conference Call Notes Industry Overview - The conference call discusses the nickel and zinc markets, highlighting the supply-demand dynamics and price trends for both metals. Nickel Market Insights - Nickel prices have been declining due to oversupply across the industry chain, particularly in the nickel-iron and stainless steel segments, with prices reaching a three-year low [2] - The demand for stainless steel is weak, exacerbated by the release of high-cost nickel-iron capacity, leading to increased inventory pressures in the nickel market [2] - Indonesia's mining quota was set lower than the previous year, but actual supply has increased, particularly with a 36.4% year-on-year rise in nickel ore imports from the Philippines [4] - The expectation is that nickel prices may stabilize between 100,000 to 110,000 yuan in 2026, with a recommendation to adopt a bearish strategy and look for short-selling opportunities [5] Zinc Market Insights - Global zinc production has increased by 59,000 tons (7.7% year-on-year), primarily from overseas mines, while domestic zinc supply remains ample due to increased imports [6] - China's refined zinc processing fees have rebounded, leading to a high operating rate of over 90% in smelting plants, which has significantly boosted domestic refined zinc supply [6] - The domestic market is expected to face significant inventory pressure, while the international market may experience price support due to supply tightness from overseas smelters [8] - The demand for zinc in 2025 is projected to be stable, with traditional industries like construction and real estate dragging down demand, while the automotive sector provides some incremental growth [9] Price Trends and Recommendations - Short-term price support for zinc may come from seasonal production cuts in northern mines and the opening of export windows for refined zinc [10] - However, the long-term outlook suggests a continued downward trend in zinc prices due to an oversupply situation, with recommendations to sell wide-strike options to capitalize on this trend [10][11] - Investors are advised to monitor overseas processing fee recoveries and smelter restarts, as well as LME inventory levels, which could impact market dynamics [11] Additional Considerations - The conference highlights the importance of keeping an eye on policy changes in resource countries like Indonesia and the Philippines, as these can significantly affect market conditions [3] - The potential for a supply-demand imbalance in the nickel market is emphasized, with a focus on the need for strategic positioning in light of high inventory levels and weak demand [5][10]

Group 1: Report Overview - Report Title: Zinc Industry Chain Weekly Report [1] - Analyst: Ji Xianfei (Chief Analyst/Co-Administrative Head), Wang Zongyuan (Contact Person) [1] - Date: November 23, 2025 [1] Group 2: Investment Rating - No investment rating information provided in the report Group 3: Core Viewpoints - Zinc supply and demand are relatively balanced, and prices will fluctuate in the short term [2][5] - The domestic zinc market shows a pattern of small inventory reduction and a decline in galvanizing starts [3] - In the strategy, the internal and external reverse arbitrage has a certain profit - loss ratio, but the driving logic within the year is not strong, and participation should be cautious [5] Group 4: Summary by Directory 1. Market Review - **Price**: The closing price of SHFE zinc last week was 22,395 yuan/ton, with a weekly decline of 0.13%; the night - session closing price was 22,345 yuan/ton, with a decline of 0.22%. The closing price of LmeS - Zinc 3 last week was 2,992 US dollars/ton, with a weekly decline of 0.75% [6] - **Trading Volume and Open Interest**: The trading volume of SHFE zinc last Friday was 74,639 lots, a decrease of 48,993 lots from the previous week; the open interest was 52,299 lots, a decrease of 47,854 lots. The trading volume of LmeS - Zinc 3 was 12,602 lots, a decrease of 14,959 lots; the open interest was 218,189 lots, a decrease of 9,321 lots [6] - **Inventory**: SHFE zinc warehouse receipts increased by 1,144 tons, the total SHFE zinc inventory decreased by 545 tons, the social inventory decreased by 5,200 tons, the LME zinc inventory increased by 8,350 tons, and the bonded area inventory decreased by 200 tons [6] 2. Industry Chain Comparison - **Inventory**: Zinc ore and smelter finished product inventories have declined from high levels, and zinc ingot visible inventories have decreased [8] - **Profit**: Zinc ore profits are at the forefront of the industry chain, and smelting profits are at the historical median [10] - **Start - up Rate**: The zinc smelting start - up rate has declined, and the downstream start - up rate is at a historically low - to - medium level [12] 3. Trading Aspects - **Spot**: The spot premiums in Guangdong and Tianjin have significantly strengthened. Overseas premiums are differentiated, with Singapore's premium remaining stable, and LME CASH - 3M remaining around 120 US dollars [16][17] - **Spread**: SHFE zinc maintains a C - structure, but there are certain changes in the far end [19] - **Inventory**: There has been a small reduction in inventory this week, and the open - interest - to - inventory ratio has continued to decline. LME inventory is mainly concentrated in Singapore, and the total LME inventory has increased [21][25] - **Futures**: The domestic open interest is at the historical median for the same period [28] 4. Supply - **Zinc Concentrate**: Zinc concentrate imports have dropped significantly, domestic zinc ore production has increased, import ore processing fees have decreased this week, and domestic ore processing fees have decreased significantly. The arrival of zinc ore at ports is at a high level, and smelter raw material inventories have decreased [31][32] - **Refined Zinc**: Smelting output has rebounded and is at a high level for the same period in history. Smelter finished product inventories have decreased and are at a high level for the same period in history. Zinc alloy production is at a high level [39] 5. Demand - **Refined Zinc Consumption**: The consumption growth rate of refined zinc is positive [45] - **Downstream**: The monthly start - up rate of downstream industries has slightly declined, mostly at a historically low - to - medium level for the same period [48] - **Terminal**: The real estate market remains at a low level, and the power grid shows structural increments [65] 6. Overseas Factors - **Energy Prices**: The prices of European natural gas, carbon, and electricity have shown certain fluctuations, which have an impact on the profitability of overseas zinc smelters [67][68][69]

Report Summary 1. Industry Investment Rating No investment rating is provided in the report. 2. Core Viewpoints - In Q4 2025, the TC of zinc ore continued to decline, strengthening the expectation of domestic smelter production cuts. The opening of the zinc ingot export window reduced the pressure of domestic zinc ingot inventory accumulation. The high spread between the domestic and overseas markets attracted attention, with domestic smelters and traders actively seeking exports. The LME zinc has limited room for further significant upside. - There is a need for profit - taking of cross - market long - spread funds, while the participation enthusiasm of cross - market short - spread funds is currently limited. It is a good opportunity to enter cross - market short - spread trades as the inventory difference between domestic and overseas markets has shown signs of convergence, and the fundamentals no longer support the further expansion of the spread. The spread is expected to converge to the range of 1,000 - 1,500 yuan/ton. - The high - low rotation of funds has spread from the stock market to the futures market, and a rebound of oversold varieties can be expected. In Q4, Shanghai zinc is not recommended as a short - allocation. The rebound height is temporarily seen at the annual line of 23,200 yuan/ton. It is unlikely to rebound to the high - level range of 24,200 yuan/ton at the beginning of the year unless the domestic deflation expectation is broken and overseas consumption exceeds expectations. - The price range of Shanghai zinc in Q4 is expected to be 22,200 - 23,200 yuan/ton, and the price range of LME zinc is 2,900 - 3,100 US dollars/ton. [73][74] 3. Summary by Relevant Catalogs 3.1 Zinc Price History and Current Situation - Historically, factors such as the European debt crisis, US QE policies, mine shortages, and changes in TC have affected zinc prices. In 2025, the zinc market has complex supply - demand and price relationships. The LME zinc inventory is 35,300 tons, SMM zinc inventory is 159,600 tons, and the smelter raw material inventory is 26 days. The LME 0 - 3 month premium is 117.04 US dollars. [5][21] - In 2025, from January to July, China's zinc ingot production was 3.8425 million tons, a year - on - year increase of 4.65%. From January to September, the output was 5.0685 million tons, a year - on - year increase of 8.83%. However, some overseas refineries have reduced production due to factors such as low TC and profit problems. In H1 2025, the overall output of major overseas refineries decreased by 89,900 tons year - on - year, a decline of 4.34%. [28][29][39] 3.2 Market Factors - **Supply - side factors**: New domestic mines such as Huoshaoyun, Russia's OZ mine, and Congo's Kipushi lead - zinc mine have been put into production, effectively alleviating the raw material constraints on domestic refineries. However, overseas refineries' profit recovery will lead to competition for mines between overseas and domestic refineries. [30][41] - **Demand - side factors**: The real estate market has shown signs of weakness, with a decline in real estate investment and a mixed situation in housing sales. The photovoltaic industry has passed the high - growth stage, and the growth rate of new installed capacity has slowed down. However, the export of galvanized sheets has increased, with the cumulative export of 10 - tariff - number galvanized sheets from January to September 2025 reaching 10.42 million tons, a year - on - year increase of 9.61%. [62][64][58] - **Policy factors**: The import and export tariffs of zinc products have been adjusted. For example, the export tariff of 0 zinc is 20%, but the provisional tariff in 2025 is 0%. The export of zinc ingots is subject to a 13% VAT, and the export tax rebate has been cancelled since 2008. [34][35] 3.3 Trading Strategies - **Cross - market arbitrage**: Cross - market short - spread is recommended as the inventory difference between domestic and overseas markets is converging, and the fundamentals no longer support the further expansion of the spread. - **Unilateral trading**: For LME zinc, beware of sudden warehouse deliveries due to low inventory. The upside space above the 3,100 - dollar integer mark is limited, so short - allocation on rallies is recommended. For Shanghai zinc, it is expected to fluctuate at a low level. In Q4, short - allocation is not recommended. Look for short - allocation opportunities above 23,000 yuan/ton or short - term long positions on pullbacks. - **Inter - period trading**: Due to the weak current situation and unclear prospects for expectation repair, the inter - period spread is difficult to widen, maintaining a normal positive market structure, and there are no inter - period arbitrage opportunities. [74][75]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - After major macro - events are settled, the market shifts to fundamentals. In November, both supply and demand are weak. The reduction in processing fees strengthens cost support. The decline in refined zinc output and zinc ingot exports alleviate the high - supply pressure. Although demand is marginally weakening, it still has resilience. The pattern of low inventory and strong structure of LME zinc is difficult to reverse in the short term, which will continuously support the zinc market. It is expected that the center of zinc prices will move up in November [3][70]. 3. Summary According to the Directory 3.1 Zinc Market Review - In October, the main contract of SHFE zinc generally continued to oscillate in a low - level range. Macro and micro factors were intertwined. With the settlement of major macro - events at the end of the month, market sentiment improved, driving up risky assets such as non - ferrous metals. The contradiction in the fundamentals focused on the change of zinc ingot exports. The SHFE - LME ratio dropped to an extreme value, strengthening the expectation of zinc ingot exports, but the export efficiency was low, making the SHFE zinc trend stalemate. By the end of the month, the futures price closed at 22,355 yuan/ton, with a monthly increase of 2.43%. - LME zinc's oscillation center continued to move up. In the middle of the month, it was suppressed by the rebound of the US dollar. After a phased adjustment, it found support near the 40 - day moving average. At the end of the month, the risk of short - squeeze overseas intensified, and the LME 0 - 3 spot premium refreshed the high since 1997. LME zinc turned strong again, breaking through $3,000/ton and finally closing at $3,050/ton, with a monthly increase of 3.16% [8]. 3.2 Macro - aspect 3.2.1 US Aspect - The US economic growth rate declined. In October, the ISM manufacturing PMI index was 48.7, lower than the expected 49.5. The employment market was weak, and inflation data was lower than expected. - The Fed cut interest rates by 25BP in October, in line with expectations, and announced to stop balance - sheet reduction on December 1st. But Powell's post - meeting statement was hawkish, and the market significantly lowered the expectation of continuous interest - rate cuts in December. - At the end of October, the meeting between the Chinese and US presidents led to a phased agreement, which eased the trade situation and was beneficial to market risk appetite. However, the US government shutdown, data delays, and the hawkish attitude towards interest - rate cuts put pressure on risky assets [11][12]. 3.2.2 Eurozone Aspect - The Eurozone economy recovered, but the sustainability of the recovery was to be observed. In October, the manufacturing PMI was 50.0. The GDP growth rate rebounded quarter - on - quarter but slowed year - on - year. The employment market was stable, and inflation declined slightly. - The ECB maintained key interest rates unchanged for the third consecutive time in October and emphasized a data - dependent policy path. The economic recovery and inflation differences among countries increased the policy divergence within the ECB, and it was expected to be more cautious than the Fed [13]. 3.2.3 Domestic Aspect - The domestic economic downward pressure increased. The GDP growth rate in the third quarter slowed down, and economic data in September was further differentiated. The export and production sectors were strong, while consumption and investment were weak. - The Fourth Plenary Session of the Central Committee and the release of the "15th Five - Year Plan" construction opinions injected long - term confidence into the market. Although the economic recovery slowed down, the probability of achieving the annual GDP growth target was high, and mild policies were still expected [14][15]. 3.3 Zinc Fundamental Analysis 3.3.1 Zinc Ore Supply Situation - **Global Zinc Concentrate Supply Recovery**: From January to August 2025, the cumulative output of global zinc concentrates was 8.297 million tons, with a cumulative year - on - year increase of 6.5%. Overseas zinc mines maintained stable production, and it was expected that the overseas zinc concentrate increment would be about 550,000 tons for the whole year. In China, the zinc concentrate output in September was 314,500 tons, with a month - on - month decrease of 8.8% and a year - on - year decrease of 10%. It was expected to continue to decline in November [23][26]. - **Adjustment of Domestic and Overseas Processing Fees and High - level Zinc Ore Imports**: In November, the average domestic zinc concentrate processing fee was 3,000 yuan/ton, with a month - on - month decrease of 650 yuan/ton. The average import ore processing fee was $105.54/dry ton, with a month - on - month increase of $18.03/dry ton. The import of zinc concentrates remained at a high level, but the growth space was limited [29][30]. 3.3.2 Refined Zinc Supply Situation - **Increased Production Expectation of Overseas Refineries and High - level Domestic Supply**: From January to August 2025, the global refined zinc output was 9.138 million tons, with a cumulative year - on - year increase of 0.03%. Domestic production was stable, and new capacities gradually released output, while overseas refineries contributed to the main reduction. In the fourth quarter, some overseas refineries had the expectation of resuming and increasing production, but the willingness to significantly increase production was still insufficient [33][34]. - **High - level Monthly Output of Refined Zinc from January to November and Increased Expectation of Zinc Ingot Exports**: In October, the refined zinc output was 617,200 tons, with a month - on - month increase of 2.85% and a year - on - year increase of 21.45%. It was expected to decrease by 0.94% to 611,400 tons in November. The import of refined zinc was expected to have no increment, while the export window opened intermittently, and the export volume was expected to increase significantly [39][40]. 3.3.3 Refined Zinc Demand Situation - **Marginal Recovery of Terminal Consumption in Europe and the US with Uncertain Sustainability**: From January to August 2025, the global refined zinc consumption was 9.0216 million tons, with a cumulative year - on - year increase of 2%. Overseas consumption increased by 1.35% year - on - year, and domestic consumption increased by 2.78% year - on - year. The supply surplus in the global zinc market expanded [47]. - **Weak Performance of Initial - stage Enterprises'开工率 and Resilience of Galvanized Exports**: In October, the开工率 of initial - stage galvanizing and zinc oxide enterprises was at a relatively low level, and that of die - casting alloy enterprises was at a neutral level. It was expected to decline in November. The export of galvanized sheets in September was 1.2262 million tons, with a month - on - month increase of 11.73% and a year - on - year increase of 2.27%. It was expected to decline in October [52][53][54]. - **Weak Traditional Consumption and Differentiated Emerging Consumption**: In traditional consumption, the infrastructure investment growth rate declined, and the real estate sector continued to be weak. In the automotive sector, production and sales were good. In the white - goods sector, the air - conditioner market faced challenges, and the production plan for November was adjusted downward. In the emerging consumption sector, the decline in the growth rate of photovoltaic installed capacity narrowed, and the wind power sector was expected to have positive growth in the fourth quarter [55][61][62]. 3.3.4 Differentiated Domestic and Overseas Inventories - The LME inventory accelerated to decline since mid - July. In October, the LME 0 - 3 spot premium soared, and the inventory decreased to 35,300 tons by the end of the month. It was expected to stabilize and slightly rebound but remain at a low level. - The domestic social zinc ingot inventory was at a high level in October, reaching 161,500 tons. It was expected to remain high, but if the zinc ingot export efficiency improved, the inventory pressure might be relieved [65]. 3.4 Summary and Outlook - Macro - aspect: The Sino - US phased agreement and the Fed's October interest - rate cut were in line with expectations, but the uncertainty of the December interest - rate cut increased. The domestic economic recovery slowed down, and mild policies were expected. The Fourth Plenary Session and the "15th Five - Year Plan" provided long - term confidence. - Supply - side: Northern mines entered the seasonal production off - season, and the processing fees decreased, strengthening cost support. The refined zinc supply was expected to decrease slightly, and the supply - side pressure was marginally relieved. - Demand - side: Terminal consumption was flat, with pressure on infrastructure and real estate. The automotive sector continued to improve, and the consumption in the photovoltaic and wind - power fields was strong. In November, the consumption entered the off - season transition period, and the initial - stage enterprises'开工率 was expected to decline moderately. - Overall: In November, both supply and demand were weak. The reduction in processing fees and zinc ingot exports alleviated the supply pressure, and the demand had resilience. The low - inventory and strong - structure pattern of LME zinc would support the zinc market, and the zinc price center was expected to move up [70].

Core Viewpoint - The zinc market is facing downward price pressure across the entire supply chain, from mining to smelting, leading to compressed profit margins. This unusual "internal weakness and external strength" market structure is reshaping global zinc trade flows and presenting unprecedented challenges to the domestic zinc industry [1][3]. Supply and Demand Dynamics - Domestic zinc ingot social inventory has surged to 163,100 tons, significantly up from around 100,000 tons earlier this year, indicating a clear supply-demand imbalance with increased supply and weak consumption [2]. - Since August, a rare divergence in domestic and international zinc markets has emerged, characterized by a strong rise in LME zinc prices from approximately $2,700/ton to a peak of $3,004/ton, while domestic zinc prices have fluctuated between 22,000 and 22,500 yuan/ton, showing weakness [2][6]. - The extreme price disparity has caused the Shanghai-LME ratio to drop to 7.4, resulting in import losses exceeding 5,000 yuan/ton, the highest level since 2022 [2][7]. Processing Fees and Market Behavior - There is a notable divergence in processing fees, with imported zinc concentrate processing fees rising while domestic processing fees are declining. As of September 20, domestic processing fees fell to around 3,850 yuan/ton, while imported processing fees rebounded to over $110/ton [8][9]. - The decline in domestic processing fees is attributed to the worsening Shanghai-LME ratio, leading domestic smelters to prefer purchasing domestic ore, tightening its supply and allowing suppliers to increase prices [10]. Production and Consumption Trends - Domestic zinc mine production in August was 370,000 tons, stable month-on-month but up 3% year-on-year, with expectations of slight improvement in September as production normalizes post-summer [12]. - Domestic refined zinc production reached a record high of 620,000 tons in August, with a year-on-year growth rate of 28%, indicating a recovery from previous lows [14][15]. - Zinc consumption remains weak, with actual consumption in August at 590,000 tons, down 2% month-on-month and 5% year-on-year, reflecting a seasonal downturn [18]. Economic Indicators and Market Outlook - Macro-economic data supports the view of weak zinc consumption, with significant declines in infrastructure and real estate investments, which are closely linked to zinc demand [19]. - Domestic zinc ingot inventory has increased significantly, reaching 160,000 tons by September 20, with projections suggesting it could rise to around 250,000 tons by year-end [20]. - In contrast, LME zinc ingot inventory continues to decline, recently dropping below 50,000 tons, which may prevent significant price drops in the near term [21]. Future Market Predictions - The overall zinc market fundamentals appear weak due to increased supply and weak consumption, yet the market has not shown a significant downward trend due to macroeconomic support and the ongoing decline in LME inventories [23][24]. - Short-term predictions indicate that while global economic conditions may support metal prices, domestic supply remains ample, limiting the potential for significant price increases in the domestic market [25].

Core Viewpoint - The domestic zinc ingot social inventory has surged to 163,100 tons, significantly increasing from the year's low of around 100,000 tons, indicating a clear imbalance between supply and demand in the domestic zinc market, characterized by a surge in supply and weak consumption [1][14]. Supply and Demand Dynamics - Since August, a rare divergence has emerged in the domestic and international zinc markets, creating an "internal weakness and external strength" scenario, with LME zinc prices rising from approximately $2,700/ton to a peak of $3,004/ton, while domestic zinc prices fluctuated between 22,000 and 22,500 yuan/ton [1][3]. - The extreme divergence in prices has led to a significant drop in the Shanghai-London ratio, reaching a low of 7.4, resulting in import losses exceeding 5,000 yuan/ton, the highest level since 2022 [1][4]. Processing Fees - There has been a notable divergence in processing fees for zinc concentrates, with imported processing fees rising while domestic processing fees have declined. As of September 20, domestic processing fees fell to around 3,850 yuan/ton, while imported processing fees rebounded to over $110/ton [5][6]. - The primary reason for this divergence is the deteriorating Shanghai-London ratio, which has led domestic smelters to prefer purchasing domestic concentrates, tightening supply and reducing processing fees for domestic materials [7]. Production and Consumption - Domestic zinc mine production in August was 370,000 tons, remaining stable month-on-month but up 3% year-on-year. The cumulative production from January to August reached 2.75 million tons, also a 3% increase year-on-year [9]. - Domestic refined zinc production in August reached 620,000 tons, with a year-on-year growth rate of 28%, indicating a recovery from previous lows [10]. - Zinc consumption in August was weak, with actual consumption at 590,000 tons, down 2% month-on-month and 5% year-on-year, reflecting a seasonal downturn [12][13]. Inventory Trends - As of September 20, domestic zinc ingot inventory reached 163,100 tons, an increase of nearly 90,000 tons from the year's low, with expectations that it may reach around 250,000 tons by year-end [14]. - In contrast, LME zinc ingot inventory continues to decline, recently dropping below 50,000 tons, indicating a potential for price pressure if the inventory trend reverses [15]. Market Outlook - The overall zinc market fundamentals appear weak due to increased supply, high processing fees, record domestic smelting output, and weak consumption. However, the market has not shown significant weakness due to macroeconomic support and the ongoing decline in LME inventories [16][17]. - Short-term predictions suggest that the macroeconomic environment, with major economies entering a rate-cutting cycle, may provide support for metal prices, although domestic supply remains ample, limiting the potential for significant price increases [18].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The Fed restarted the interest - rate cut cycle, which is favorable for risk assets, but the US government shutdown and the resurgence of China - US tariff conflicts have increased macro uncertainties. China's economy faces certain pressures, and new policy - based financial instruments are expected to strengthen economic growth this year, with the possibility of further policy stimulus still existing [3][88]. - The divergence between domestic and foreign zinc processing fees has intensified. The inflection point of domestic ore processing fees has emerged, and there is still room for adjustment as smelters' winter storage demand rises. The continuous decline in the price of by - product sulfuric acid has compressed smelter profit margins, reducing production enthusiasm. Although refined zinc supply will recover in October, the room for further growth is limited. The current Shanghai - London price ratio is near the critical point for zinc ingot exports, and the opening of the export window is expected to relieve the domestic surplus pressure [3][88]. - The peak consumption season is somewhat dull. The start - up rate of primary enterprises has improved month - on - month but is weaker than the same period. They maintain a just - in - time purchasing rhythm and lack the willingness to actively replenish inventories. In the terminal market, infrastructure has a marginal repair demand and may become an important support for demand in the future; the consumption of automobiles and household appliances remains resilient, the performance in the wind and solar sectors is divergent, the export of galvanized sheets faces weakening pressure, and the real estate sector continues to be weak [3][88]. - Overall, there are more overseas macro disturbances, and market sentiment may fluctuate. The macro trend is less clear. Fundamentally, the situation remains strong overseas and weak domestically. The resumption of smelter production has promoted supply recovery, and demand lacks significant highlights, leading to an increase in supply - demand pressure. However, the expectation of zinc ingot exports is strengthening, which will relieve the domestic surplus pressure, while the liquidity risk of LME zinc will also decrease. These two forces will balance each other, and zinc prices are expected to fluctuate weakly [3][90]. 3. Summary by Relevant Catalogs 3.1 Zinc Market Review - In September, the main contract price of SHFE zinc first rose and then declined, seeking support. At the beginning of the month, supported by the Fed's interest - rate cut expectation and the peak consumption season, zinc prices fluctuated strongly. After the Fed cut interest rates, the market sold on the news, and the strong US economic data supported the US dollar, causing zinc prices to fall to 21,825 yuan/ton, with a monthly decline of 1.42%. LME zinc rose first and then fell. In the first half of the month, it broke through $2,900/ton and reached a high of $3,003.5/ton. After the interest - rate cut and hawkish remarks from Powell, it corrected and closed at $2,956.5/ton, with a monthly increase of 5.06% [8]. 3.2 Macroeconomic Analysis 3.2.1 US Situation - The US economy is cooling but remains resilient. The Q2 real GDP grew by 2.08% year - on - year and 3.8% quarter - on - quarter. In August, retail sales increased by 4.8% year - on - year and 0.6% month - on - month. In September, the ISM manufacturing PMI was 49.1, but new orders declined. The non - manufacturing PMI was 50, with business activity falling below the boom - bust line. The ADP employment data in September decreased by 32,000, and inflation continued to rise slowly. In September, the Fed cut interest rates by 25bp to 4.0 - 4.25% [11][12]. - The US government shut down in late September, and Trump announced additional tariffs on China in October, which increased market uncertainties [13]. 3.2.2 Eurozone Situation - In September, the eurozone's manufacturing PMI fell to 49.5, while the services PMI rose to 51.4. Inflation rose slightly, and the unemployment rate dropped to 6.2% in August. The ECB kept interest rates unchanged in September, and its officials' statements were cautious [14]. 3.2.3 China's Situation - In August, most of China's economic indicators continued to decline. Exports, industrial production, consumption, and investment all showed different degrees of slowdown. The manufacturing PMI in September was 49.8%, and the non - manufacturing PMI fell to 50.0%. The consumption during the National Day holiday was structurally differentiated [16]. - Policy support is expected. The Politburo meeting in September decided to hold the Fourth Plenary Session of the 20th CPC Central Committee, and new policy - based financial instruments worth 500 billion yuan are expected to boost infrastructure investment [17]. 3.3 Zinc Fundamental Analysis 3.3.1 Zinc Ore Supply - Global zinc concentrate supply has recovered as expected. From January to July 2025, the cumulative output was 7.1994 million tons, a year - on - year increase of 6.02%. Overseas zinc concentrate output is expected to increase by about 550,000 tons this year, and domestic output is expected to increase by about 100,000 tons [30]. - The divergence between domestic and foreign processing fees has intensified. In October, the average domestic processing fee was 3,650 yuan/ton, a month - on - month decrease of 300 yuan/ton, while the average import processing fee was $87.51/dry ton, a month - on - month increase of $16.83/dry ton. In August 2025, 467,300 tons of zinc concentrate were imported, and from January to August, the cumulative import volume was 3.5027 million tons, a year - on - year increase of 43.06% [34][35]. 3.3.2 Refined Zinc Supply - Overseas smelters are operating at low loads, while China contributes to the increase in supply. From January to July 2025, global refined zinc output was 7.911 million tons, a year - on - year decrease of 1.15%. Overseas output decreased by 4.7%, while China's output increased by 2.65% [41]. - From January to September 2025, the cumulative output of refined zinc was 5.0691 million tons, a year - on - year increase of 8.85%. In September, the output was 600,100 tons, a month - on - month decrease of 4.2%. It is expected that the output in October will increase by 3.77% to 622,700 tons. In August, 25,600 tons of refined zinc were imported, and from January to August, the cumulative import volume was 235,500 tons, a year - on - year decrease of 11.81%. The import window remains closed, and the export window may open [45][46]. 3.3.3 Refined Zinc Demand - Globally, from January to July 2025, refined zinc consumption was 7.843 million tons, a year - on - year increase of 2.12%. Overseas consumption increased by 1.33%, and domestic consumption increased by 2.96%. The supply surplus in the global zinc market was 72,000 tons, a significant reduction from the previous year [56]. - In the overseas market, the real estate and automotive sectors showed marginal improvement. In the US, new home sales in August reached an annualized rate of 800,000 units, and new car sales in August were 1.4913 million units. In the eurozone, the construction confidence index improved slightly [57]. - In September, the start - up rate of primary processing enterprises showed a slow recovery. In August, 1.0975 million tons of galvanized sheets were exported, and from January to August, the cumulative export volume was 9.2182 million tons, a year - on - year increase of 10.96% [60][62]. - In the traditional infrastructure sector, investment growth has declined, but there is a demand for recovery. In the real estate sector, investment and sales continue to be weak. In the automotive and household appliance sectors, production and sales are resilient. In the emerging consumption sector, the photovoltaic industry is expected to drive zinc consumption growth, and the wind power industry is also developing well [64][72][73]. 3.3.4 Global Visible Inventory - In September, LME zinc inventory continued to decline, reaching 38,200 tons at the end of the month. The LME 0 - 3 spot premium rose and then slightly declined to $55.98/ton. - In September, China's social inventory first increased and then decreased, reaching 141,400 tons at the end of the month. There is a strong expectation of inventory accumulation during the National Day holiday in early October, but inventory is expected to decline again after the holiday [87].

Report Industry Investment Rating No relevant information provided. Core View of the Report - The zinc market is currently facing a situation where domestic inventory accumulation has slowed down, and zinc prices are oscillating downward. After the macro - impact fades, zinc prices may have further room to fall [1][7]. Summary according to the Table of Contents 1. This Week's Market Review - **Futures Prices**: The Shanghai zinc futures price first oscillated strongly and then gradually weakened, with a significant decline on Friday night. The market was influenced by the Fed's actions and macro - data, and the zinc's weak fundamentals could not support high prices. The Shanghai - London ratio approached 7.5. The outlook is for prices to oscillate and decline [6][7]. - **Spot Prices**: In Tianjin, zinc prices fell to an acceptable level for downstream buyers, who increased point - price pick - ups for pre - National Day stocking. Inventory decreased, and some smelters were reluctant to sell, leading to a slight increase in the trader's delivery premium. In Shanghai, downstream buyers actively purchased at low prices for stocking, but as some completed stocking and the market rebounded, spot trading weakened [8]. - **Inventory and Warehouse Receipts**: The latest LME zinc inventory was 42,775 tons on September 26 and continued to decline this week. The overseas zinc ingot out - storage was due to a bank's inventory from the previous year [10]. - **Export Profit and Loss**: SMM's new export profit - loss calculations showed a loss of 611 yuan/ton for Southeast Asian warehousing and a profit of 29.5 yuan/ton for Southeast Asian spot (turning from loss to profit) on September 25. There may be a chance of profit in warehousing next week, and zinc products may be exported [14]. 2. Raw Material End - **Processing Fees**: As of September 26, the SMM Zn50 weekly TC average price decreased by 200 yuan/metal ton to 3,650 yuan/metal ton. Domestic zinc mine production is expected to decline in the fourth quarter, and smelters' winter - stocking demand and miners' profit considerations may lead to a downward adjustment of zinc ore processing fees in October [17][18]. - **Zinc Concentrate Supply**: In August 2025, 467,300 tons (physical tons) of zinc concentrate were imported, a 6.8% decrease from July and a 30.06% increase year - on - year. The cumulative import volume from January to August was 3.5027 million tons (physical tons), a 43.06% increase year - on - year [21]. - **Zinc Concentrate Inventory**: The total inventory of SMM zinc concentrate at major Chinese ports was 339,300 tons, a decrease of 84,200 tons from last week, with a significant decline at Fangchenggang Port [26]. 3. Smelting End - **Refined Zinc Import**: In August 2025, China imported 25,656.83 tons of refined zinc, a 43.30% increase from July and a 3.59% decrease year - on - year. Kazakhstan was the largest source of imports, with 20,824.76 tons imported, a 69.97% increase from July and a 67.01% increase year - on - year. Iran was the second - largest source, with a 9.40% year - on - year increase [30]. - **Smelting Start - up Rate**: The start - up rate remained high, and the improvement in the processing economy of domestic ore led to an increase in the overall start - up rate [31][34]. 4. Demand End - **Refined Zinc Export**: No specific data on refined zinc export was provided other than the relevant charts [38][39]. - **Downstream Production and Start - up Rate**: Terminal orders remained weak, and typhoons affected the Guangdong market. The zinc alloy industry was affected by weak demand and low - price alloy competition. In the zinc oxide market, feed - grade zinc oxide was in the peak season, but rubber - grade and ceramic - grade zinc oxide had general demand [40][44]. - **Downstream Prices and Basic Situation**: The overall sales of galvanized pipes were weak, and inventory increased. Galvanized structural parts showed marginal improvement in consumption compared to August. The overall start - up rate of downstream industries was expected to decline slightly next week [44][45]. 5. Zinc Inventory - **Downstream Inventory**: No specific analysis of downstream inventory other than the relevant charts [49]. - **Domestic Social Inventory**: As of September 18, the total inventory of SMM's seven - location zinc ingots was 158,500 tons, a decrease of 2,100 tons from September 15. The Shanghai bonded - area inventory was 8,000 tons on September 25, unchanged from the previous period [52].