Zinc Performs Best among Base Metals (May 30-Jun. 3, 2016)

SHANGHAI, Jun. 3 (SMM) – The US dollar index hit a 2-month high of 95.968 on Monday, but then fell back on mixed US economic data. Crude oil hit its highest since May 26 at USD 50.10/bbl on Tuesday, but then fell back to USD 47.75/bbl on expectations that no deal on output control will be reached during the OPEC meeting. Base metals experienced intensified divergence.   

Zinc was the best performer among base metals. SMMI.Zn closed this week with 3.82% gain. LME zinc once hit USD 2,004/mt, the highest since late July 2015. SHFE zinc jumped RMB 500/mt on Thursday, with positions of all SHFE zinc contracts up nearly 100,000 lots. Smelters in domestic spot zinc market sold actively at above RMB 15,000/mt. Traders actively hoarded goods for hedging purpose, while downstream buyers turned away from higher prices. 

SMMI.Ni gained 1.08%. SHFE nickel was range-bound. Supply of Russian nickel in spot market tightened, due to strong buying from traders.  

LME tin hovered above USD 16,000/mt, while SHFE tin swung widely. Supply in spot market was ample and demand weakened, causing spot premiums to narrow. SMMI.Sn gained 0.73%.  

SHFE lead bounced back from lows, allowing spot prices to rise as well. Supply and demand remained weak in spot market, though. SMMI.Pb was up 0.19%. 

LME copper and SHFE copper lost about 2% due to short selling. Traders in spot market jointly raised spot premiums, while downstream producers went bargain hunting. SMMI.Cu was down 0.65%.

LME and SHFE aluminum both fell. Premiums in Guangdong over Shanghai narrowed from RMB 150/mt to RMB 30/mt due to growing shipments from latter to the former. SMMI.Al was down 1.03%.   

SMMI was up just 0.09% due to mixed performance among base metals. 

Base metals are expected to continue diverging from each other this coming week.