Metals News
SMM Morning Review - 2010/2/2 Zinc Market
smm insight
10:21AM
Feb 2,2010
Source:SMM

SHANGHAI, Feb. 2 (SMM) -- LME Market

 
Close
(USD/mt)
Premium/Discount
Volume
(lot)
Position
(lot)
Inventory
(mt)
3-mth Contract
Spot – 3 mth
Jan. Average
2,445
-26
57,463
222,379
490,804
Feb. 1st  
2,160
-10.5
52,543
206,519
497,125

SHFE Market

 
Zinc – Spot Month (RMB/mt)
RMB/USD
SHFE Close
Settlement
Weighted Ave.
Jan. 18th             
20,190
20,065
20,069
1:6.8272
Feb. 1st                  
16,950
16,975
19,171
1:6.8271

 
Zinc – 3mth (RMB/mt)
Shanghai Spot
#0 Zinc Ingot
SHFE Close
Settlement
Weighted Ave.
Jan. 18th             
20,550
20,415
20,415
19,955
Feb. 1st                 
17,240
17,250
20,233
16,800

Summary

On the first trading day of this week, SHFE zinc prices opened low and continued to be weak, and SHFE 1005 zinc contract prices closed at RMB 17,430/mt, down 3.1%. Trading volumes set a new high of 1.12 million lots, and positions increased by 11,500 lots, mainly long positions. Although long sentiment became stronger, SHFE zinc prices remained on a downward track, so a cautious attitude should be taken in the near term.

Downstream consumers remained cautious about purchases in the spot markets. On February 1st, #0 zinc was traded between RMB 16,750-16,850/mt, with spot discounts at RMB 500/mt against SHFE 1005 zinc contract, while #1 zinc was traded in the RMB 16,700-16,800/mt range. Marked declines in SHFE copper and zinc prices further generated the wait-and-see sentiment in the market, resulting in very lukewarm trading sentiment. Smelters were reluctant to move goods, leaving market supply limited, but downstream purchases were also limited, with goods in the market mainly from traders, so market supply was not tight.

On February 1st, LME zinc prices ended its downward trend due to better-than-expected manufacturing data in the US, and closed at USD 2,160/mt, with spot discounts against LME three-month zinc contract narrowing to USD 10/mt, an indication of market attitude toward lower prices. However, LME zinc inventories continued to grow to 497 kt, weighing on LME zinc prices, and any upward momentum for LME zinc prices will be limited in the short term. SMM predicts SHFE three-month contract zinc prices will fluctuate in the RMB 17,400-18,000/mt range today.

To contact the writer on this report: monicagao@smm.cn

 

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