LME and SHFE Zinc Slumped Approaching the Weekend amid Sluggish Macro Sentiment

SHANGHAI, Jun 27 (SMM) -

For LME zinc, the United States and Iran had conflicts at the Strait of Hormuz, where 1/5 of the global oil trades will pass through, at the beginning of last week amid the stagnation of the Iranian nuclear deal, leading to a tense geopolitical situation. The global crude oil prices rose again after it slumped earlier, and the energy shortage created bullish sentiment for non-ferrous metals, boosting the market prices of LME zinc. Powell still held hawkish views and said that to control inflation is still the main focus. It is almost certain that an interest rate hike by 75 basis points will be launched in July. The initial value of the June Markit manufacturing PMI in the United States stood at 52.4, hitting a 23-month low and the service industry PMI stood at 51.6, a 5-month low, and both of which were lower than expected. The market players were much worried about the outlook with increased risk of recession. As prices of non-ferrous metals then fell generally, LME zinc moved downwards, hitting a low of $3,410/mt this year. LME inventory decreased by 3,525 mt to 80,275 mt, recording a new low. But the tight spot supply supported zinc prices. LME inventory remained low and the proportion of cancelled warrants rose, but the bearish macro sentiment suppressed the support of fundamentals. As of 15:00 on June 24, LME zinc closed at $3,400/mt, down $124/mt or 3.52%.

For SHFE zinc, the accelerated issuance of special debt and other bullish macro policies boosted market sentiment to a certain extent at the beginning of the week, but LME zinc still outperformed SHFE zinc. The sharp fall of LME zinc later in the week kept SHFE zinc at a low level. On June 24, SHFE zinc plummeted, dropping below the low of Bollinger Band and stood at 23,865 yuan/mt, hitting a low within the year. SHFE zinc fell by 1,815 yuan/mt to 23,905 yuan/mt, down 7.06% on a weekly basis.