SMM Zinc Market Morning Review (2015-4-13)

SHANGHAI, Apr. 13 (SMM) – China March CPI released last Friday topped market expectations, and PPI dropped more slowly, helping ease market concerns over deflationary pressure in China. But ongoing downward pressure fueled market anticipation of additional stimulus measures, boosting market sentiment and driving up China’s A-share market. LME zinc prices surged to USD 2,200/mt during European and US trading session, reaching as high as USD 2,212/mt and closing at USD 2,208/mt, up USD 31/mt or 1.42%. Trading volumes were up 1,136 to 12,943 lots, and total positions increased 1,297 to 300,000. LME zinc inventories were steady.

SHFE 1506 zinc contract prices opened at RMB 16,375/mt last Friday evening, then fluctuated between RMB 16,330-16,430/mt, and closed the day at RMB 16,370/mt, up RMB 100/mt or 0.61%.

Investors will no longer be restricted to only one stock account in China's A-share market and each can have up to 20 accounts from Monday, the managing institution for stock accounts said on Sunday. This should inspire domestic stock markets. The number of original members of the Asian Infrastructure Investment Bank increased to 46. When combined with the “One Belt One Road” plan, demand for base metals is expected to improve.

However, the US dollar index hovers around 99, constraining any base metals price gains. Greek crisis will continue to plague the market.

Crude oil prices were around USD 50/bbl, with high inventories. Global stocks markets mostly rose; precious metals prices increased. LME base metals prices ticked up slightly.

China’s March trade data slated for release today are not promising, which will dampen market sentiment. LME zinc prices are expected to move between USD 2,180-2,220/mt today. SHFE 1506 zinc contract prices will fluctuate between RMB 16,300-16,400/mt, with spot discounts of RMB 130-110/mt against SHFE 1506 zinc contract prices.