SMM Daily Review - 2011/8/25 Zinc Market

SHAGNHAI, Aug. 26 (SMM) -- On Thursday, SHFE 1111 zinc contract prices opened lower at RMB 16,890/mt and surged in the morning session, but then fell slightly to move around RMB 17,000/mt level during the day. Total positions surged by over 40,000 lots as a large number of longs rushed to the market, pushing up SHFE three-month zinc contract prices to a intraday high of RMB 17,200/mt. At the end of trading, total positions increased by over 16,000 lots, with SHFE three-month zinc contract prices rolling back previous gains to close at RMB 17,085/mt, up RMB 165/mt, or up 0.98%. Transactions improved with trading volumes increasing by 250,000 lots to 565,640 lots, and total positions increased by 30,094 lots to 290,738 lots.

In domestic spot markets, #0 zinc was traded between RMB 16,850-16,900/mt in the morning session, and then was traded between RMB 16,800-16,850/mt as SHFE zinc prices fell, with transactions mainly made at the high end, and with discounts below negative RMB 100/mt against SHFE 1110 zinc contract prices. #1 zinc was traded between RMB 16,750-16,800/mt. Downstream buying interest was low as they were uncertain of price trends. Discounts against SHFE 1110 zinc contract prices extended to negative RMB 150-180/mt along with rising SHFE zinc prices, driving up spot offers to RMB 16,950/mt, and causing some downstream buyers to increase purchase. But the overall transactions did not expand notably.