LME Zinc Prices Met Resistance in Absence of Active Longs

SHANGHAI, Apr 17 (SMM) – Last Friday, G7 ministers agreed to speed up the development of renewable energy and called for a reduction in natural gas consumption; U.S. retail sales fell more than expected in March as consumers cut back on purchases of motor vehicles and other big-ticket items, a sign that the rising interest rate caused economy to lose momentum at the end of the first quarter ; the dollar index rebounded from a one-year low after some data for March such as retail sales were not as weak as some economists had feared, but a Fed policymaker warned still warned that the Fed needs to keep raising rates to bring down inflation.

LME zinc opened at $2,858.5/mt at last Friday night’s session and closed at $2,846/mt, down $4.5/mt or 0.16%. Trading volume rose to 6,983 lots, and open interest lost 1,799 lots to 175,000 lots. LME inventory rose to 44200 mt as of last Friday. On the macro front, the demand in Europe and the US continued to weaken, causing a rapid fall in premiums in Europe. The market should be alert to concentrated delivery.

Last Friday night, the most-traded SHFE zinc 2305 opened at 22,410 yuan/mt and finally settled at 22,385 yuan/mt, up 45 yuan/mt or 0.2%. The trading volume was 3,090 lots, and open interest decreased 648 lots to 91,000 lots. On the supply side, except for Inner Mongolia, most other regions saw a decline in TCs for zinc concentrates, which suggests that the zinc smelters gained fewer profits. In terms of consumption, the galvanising companies maintained normal operation on average orders placed by end users, and they focused on shipping the in-plant inventories of finished products. In addition, the slump in zinc prices last week promoted on-dip purchases among downstream enterprises, allowing domestic social inventory to trend lower.