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Original title: You can expect the bull market in Shanghai Zinc Year of the bull Source: Futures Daily
Futures Daily reported Feb 18: Macroeconomics and fundamentals resonate positively
In the medium and long term, under the combined effects of the continued attenuation of the epidemic, the greater relaxation of the global macroeconomy, the tight balance between supply and demand and good technical graphics,Zinc priceThe steady rising pattern is expected to continue in 2020, and the bull market in the year of the ox is worth waiting for. It’s just that the midline needs more appropriate adjustments and investors need to be patient and calm when trading.
Time entered 2021. Zinc prices did not continue the good uptrend of last year. Instead, there was a strong tightening trend. Shanghai Zinc’s main contract price in 2103 fell from last year’s high of 22,255 yuan / ton to around 19,350 yuan / ton. To break the rising channel trend formed almost a year ago, only in the last week of the year before using the Spring Festival holidays for a chance to shrink and bounce back. At the end of the ongoing New Year holidays, the strong trend of zinc on the outer plate is expected to support the strength of Shanghai Zinc in the short term. In the medium and long term, the author judges that, under the combined effects of continued relief from the epidemic, greater global macro relaxation, tight supply-demand balance and good technical charts, zinc prices are expected to continue in 2020. Steadily rising, the bull market in the year of the ox is worth the expectation of investors.
Options during the epidemic period after macroeconomic relaxation
Last month’s impact on the international macro level obviously cannot be ignored. The regime change of the world’s largest economy has brought great uncertainty to the international market. After the left-wing President Biden succeeded the right-wing Trump, the US Department of Finance – Line of changes in education, investment, employment and other fields policies. The good news is that the Biden administration brought in a $ 1.9 trillion stimulus plan as soon as he took office. After the Democrats control the government and Congress, they will always free up large-scale liquidity to buy voters. At least the current Fed executives have come up with a plan that won’t cause it. The consensus on large-scale inflation to offset the major trauma (epidemic) outweighs all potential risks. Of course, this is also the powerless choice of governments in the post-epidemic period. Once the diminishing marginal effect of the stimulus measures appears, the new plan should be placed on the agenda for discussion. Europe is expected to follow up fully on the United States to introduce large-scale relaxation policies in the first quarter.
After the resumption of the new corona epidemic, the base metals market is really very valuable. The outbreak of the epidemic in early 2020, the global trend in asset prices plummeted to reflect pessimistic expectations, and then China reversed the market trend through rapid prevention and control of the epidemic and energizing the economy. The main theme of the increase in 2020. I think the technical graph for the zinc price in 2021 is likely to be close to 2020, but the specific pace and details will be different. The global epidemic control situation in the first quarter is very similar to the situation in China at the same time in 2020. As of February 16, WHO reported that the number of new cases has decreased for five consecutive weeks, forming a trend dependable. This creates extremely favorable conditions for the top of the macroeconomy. From this perspective, the price of zinc is likely to have found a low point during the year. The only difference is that the efficiency of controlling the epidemic and boosting the economy in developed countries is lower than that of my country, so the price is at a low level. The delay time should be longer. Subsequently, as the world economy gradually recovers to its pre-epidemic level, it is logical that zinc prices will build a new upward channel.
Tight supply-demand balance becomes normal “zinc”
China’s zinc production in December 2020 was 602,000 tons, 1.5% less year-on-year; cumulative production for the year reached 6,425 million tons, an increase of 2.7% year-on-year. The increase in production on the supply side was small and basically maintained the previous scale. In terms of terminal demand, in December 2020, automobile production and sales increased by 5.7% and 6.4% year-on-year, respectively, and the growth rate slowed; annual automobile production and sales were 25,225 million and 25,311 million, 2% and 1.9% respectively. Since the fourth quarter of last year, the supply of zinc has declined and demand has risen steadily, causing some degree of contradiction between supply and demand and forming a wave of short-term trends.
Looking ahead, demand expectations are very optimistic. Several localities have introduced policies to encourage the local Chinese New Year, which not only makes it easier to control the epidemic, but also makes it easier for downstream companies to start production. Therefore, it is very likely that the tight balance of zinc supply and demand will be upgraded from a short-term trend to a medium and long-term trend. The situation of international supply and demand is similar to the national situation. In November last year, world refined zinc production was 1,204 million tons, consumption was 1,186 million tons, and the oversupply was 17,700 tons, which remained basically stable at approximately the critical level. Later, the Shanghai zinc market is still the main topic of the market.
Channel change progress needs a good time
The price agreement of the entire Shanghai zinc contract can also confirm the above opinion. Good expectations make the price of the nearly one-month contract high, but the price of the forward contract is severely reversed due to demand and timing uncertainty. provides a good opportunity for long-term bulls to open positions. From a graphical point of view, the price direction should not change after the ascending channel was broken last year, but this round of adjustment corresponds to the increase for the whole year. Therefore, it is expected to challenge the high point with the help of the outer disk in the short term, but it cannot create the main rising wave. The probability of a quarterly swing is extremely high, with the January low expected to become a full-year low with macro and fundamental support. After the full adjustment of the swings in the first quarter, the speculative wick of the peak season overlaps and long-term advances can be expected.
In short, Shanghai Zinc takes advantage of short-term momentum to ramp up, and long-term breakthroughs can be expected, but the midline needs more appropriate adjustments and investors should be patient and calm when trading. It is recommended to open multiple positions on the forward contract and enter multiple long-term orders in the event of a sharp decline. Monitor the corresponding positions and stop loss according to the cycle, and pay close attention to the support of the two lows in January and October of last year. (Author’s unit: Guanbang Fund)
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