Why Zinc Prices Shoot up to 3-Month High? Where Are They Going? SMM Reports

SHANGHAI, Jun. 29 (SMM) - Zinc prices have been rising over the past three weeks. LME zinc rose to $2,700 per tonne and reached $2,769.5 per tonne. August zinc on the SHFE touched as high as 22,790 yuan per tonne.

What have driven up zinc prices?

China’s Zinc Prices Rise on Robust Consumption

Despite continuous inflows of imported zinc recently, inbound shipments decreased due to the closing of import profit window, SMM said. Output at zinc smelters grew in June, but some have yet to complete maintenance. So, supply increased only slowly. On the demand side, zinc oxide and die-cast zinc alloy consumption is steady in June. And operating rates at galvanizers will rise about 10% in June after environmental protection push in North China, according to SMM survey. Supplies will remain tight in the near term, and give support to zinc prices.

Surge in LME Canceled Warrants Bolster Zinc Price

Increased canceled warrants on the LME have pushed up zinc prices, SMM said. The proportion of canceled warrants on the LME surged to 76.11%, with 224,075 tonnes on June 29.

Spot Zinc Premiums Invert to Discounts as SHFE Zinc Rides Roller Coaster, SMM Reports

Meanwhile, global zinc supply remained in deficit during the first four months of the year. Global refined zinc output was 4.244 million tonnes in this period, while demand was 4.579 million tonnes, according to ILZ and SMM. As of June 29, LME zinc inventories fell over 120,000 tonnes to 294,000 tonnes from the beginning of the year, SMM reported. Falling visible and invisible zinc inventories have given a boost to LME zinc prices.

Positive Macroeconomic Factors Push up Zinc

The US dollar index slumped to 95.65 this week, the lowest from October 2016. US postponed health care votes. When combined with other central banks’ hawkish tone and sluggish economic indicators in the US, the US dollar index slumped. Eurozone and Chinese economy is steady. Positive macroeconomic front inspired commodities. Ferrous and base metals rose across the board.

Japan Zinc Shipments Fall Remarkably January-May

LME zinc prices will hold strong and point toward $2,800 per tonne in the near term, SMM predicts. 

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