SMM Zinc Market Morning Review (2015-5-15)

SHANGHAI, May 15 (SMM) – LME zinc prices opened at USD 2,335/mt, then touched as high as USD 2,352/mt during Asian trading hours. But during US trading hours, LME zinc prices plummeted on falling crude oil prices, and closed at USD 2,304/mt, down USD 34/mt or 1.45%. Trading volumes decreased 2,102 to 8,035 lots, and total positions grew 1,516 to 340,620.

SHFE 1507 zinc contract prices opened at RMB 16,940/mt Thursday evening, then dropped to RMB 16,840/mt, and closed at RMB 16,870/mt, down RMB 0.82%. Trading volumes decreased 64,456 to 86,050 lots, and total positions fell 2,054 to 130,018.

Macroeconomic news was mixed, and commodity market saw capital withdrawals, weighing on base metals prices.

China’s budget revenue was up 8.2% in April. Growth of budget revenue in the first four months of this year dropped 6.3 percentage points. This is the result of sliding imported commodity prices, which reduced imports and import tax revenue. Petroleum tax revenue also decreased significantly. Power consumption in April was 441.5 billion KWH, up 1.3% YoY. YTD power consumption through April rose 0.9% YoY to 1.73 trillion KWH. However, power consumption in the primary industry declined 2.6% YoY, and that for the secondary industry was down 0.8% YoY. Power consumption in the tertiary industry increased 7.9%, and urban and rural power consumption grew 4.0%. The poor industry sector weighs on base metals demand.

The number of initial jobless claims in the US for the week ending May 9 decreased 1,000 to 264,000, a record low over the last 15 years. But the Fed will unlikely raise interest rate any time soon, weighing down the US dollar index to close the day down 0.32% at 93.37.

Gold prices rose 0.6% to hit a three-month high. Crude oil prices closed the day with a 1% decline. European and US stocks closed with gains. LME base metals prices dropped across the board.

LME zinc prices are expected to move between USD 2,290-2,315/mt today. SHFE 1507 zinc contract prices will fluctuate between RMB 16,800-16,900/mt, with spot discounts of RMB 110-150/mt against SHFE 1507 zinc contract prices.