LME Zinc Prices Posted a 5-day Losing Streak

The data released last night showed signs of economic weakness in the US. The ADP employment data for March came in at 145,000, lower than the forecast of 200,000, and the previous print was revised up from 242,000 to 261,000. The ISM’s non-manufacturing PMI recorded 51.2 in February, falling short of the estimate 54.5 and previous print 55.1. The trade account recorded -$70.5 billion in February, the largest deficit in half a year.

In addition, Swap Contracts lowered the possibility of the Fed’s raising interest rates by 25 basis points at the May meeting to about 44%; Cleveland Fed President Mester was in favour of a slight rise in interest rate this year, contrary to the market expectations of rate cuts. He also said that it is too early to say for sure about the rate hike in May; Saudi Arabia planned to raise the prices of light oil sold to Asia by 30 cents per barrel in May. According to another source, Ural crude oil prices raced above the "price cap” as buyers scrambled to buy it, and Brent oil prices also notched gains; numerous Chinese officials announced to strongly oppose to any form of exchanges between the United States and Taiwan officials.

LME zinc opened at $2,840.5/mt overnight, touching a low of $2,775/mt, and closed down $37.5/mt or 1.32% at $2,807/mt. Transaction volume stood at 7,315 lots, and open interest rose by 1,627 lots to 181,000 lots. LME zinc inventory shed by 150 mt to 44,900 mt. LME zinc prices posted a 5-day losing streak.

Shanghai Futures Exchange was closed yesterday due to the Qingming Festival, so there is no price data on SHFE zinc prices.

The ADP data showed that private employment increased by 145,000 jobs in the United States in March, which was lower than expected. The ISM’s non-manufacturing PMI fell short of expectations at 51.2 in March. Therefore, it is expected that interest rate hikes may slow down, but the poor economic outlook still pressure LME zinc prices.

Fundamentally, the profits of European smelters are gradually recovered, and the overseas zinc prices are heading downward. Similarly, the domestic supply also face pressure, and SHFE zinc prices are vulnerable to fluctuations brought by macro front and supply pressures.