SHANGHAI, Apr. 14 (SMM) – 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%. SHFE 1506 zinc contract prices opened at RMB 16,370/mt today, and pulled up to RMB 16,470/mt in the morning session, but met resistance at RMB 16,500/mt then fell back down to RMB 16,400/mt, and closed at RMB 16,450/mt, up RMB 180/mt or 1.11%. Trading volumes decreased 28,824 to 147,650 lots, and total positions declined 2,520 to 127,540. SHFE 1506 zinc contract prices are expected to rise to test RMB 16,600-16,700/mt this evening.
#0 zinc prices were between RMB 16,280-16,310/mt, RMB 110-90/mt below SHFE 1506 zinc contract prices. #1 zinc was traded between RMB 16,180-16,230/mt. SHFE 1506 zinc contract prices fluctuated around RMB 16,390/mt after opening, up RMB 120/mt from last Friday, with spot discounts narrowing. Smelters sold actively, but some cargo holders held back goods due to anticipation of narrowing spot discounts on falling SMM/LME zinc price ratio. Traders purchased at lows, but cheap resources were limited. Downstream buyers replenished goods as needed, with trading mainly made between traders. Shuangyan and Yuguang #0 zinc prices were RMB 16,300-16,310/mt, RMB 100-90/mt below SHFE 1506 zinc contract prices. Qinxin and Qilin #0 zinc prices were RMB 16,280-16,300/mt, with spot discounts of RMB 110-100/mt against SHFE 1506 zinc contract prices. Feilong #0 zinc prices were RMB 16,270-16,290/mt, with spot discounts of RMB 110/mt against SHFE 1506 zinc contract prices. KZ #0 zinc prices were RMB 16,190-16,210/mt, with spot discounts of RMB 190-180/mt against SHFE 1506 zinc contract prices. SHFE 1506 zinc contract prices edged up to RMB 16,400/mt in the afternoon, with spot discounts widening RMB 10/mt.
LME zinc prices surged last week to hit a new high since the start of the year. With regard to zinc price trends, SMM surveyed 30 market players to find that 57% are bullish toward zinc price trends, believing LME zinc prices will rise to USD 2,240-2,250/mt, and SHFE 1506 zinc contract prices will climb to RMB 16,700-16,750/mt. Should LME zinc prices increased further, SHFE zinc prices will also rise, despite weak domestic fundamental. In China’s spot markets, cargo holders were unwilling to sell at lower prices, bolstering spot zinc prices, and keeping spot discounts to stay around RMB 100/mt. When combined with market expectations of smaller inflow of imported zinc from the falling SMM/LME zinc price ratio, spot zinc prices are expected to maintain upward track.
23% are bearish, seeing LME zinc prices falling to USD 2,180/mt, and SHFE 1506 zinc contract prices falling to RMB 16,250/mt. They base their opinion on sluggish market fundamentals. One capital withdrew, LME zinc prices should slump. Inventories in Shanghai, Guangdong and Tianjin remained high, meaning smelters are producing proactively. But downstream demand remains soft, which will negatively affect zinc prices.
20% are neutral, believing LME zinc prices will move between USD 2,190-2,230/mt, and SHFE 1506 zinc contract prices will fluctuate between RMB 16,300-16,600/mt. A large number of investors left the market at RMB 16,500/mt. When combined with stable spot prices and a wait-and-see attitude by traders, zinc prices are not promising.
