SHANGHAI, Oct. 25 (SMM) -- SHFE three-month zinc contract prices rallied again on Monday and opened higher at RMB 14,520/mt boosted by strong LME zinc prices last Friday, with prices mainly moving between RMB 14,400-14,500/mt in the morning session. SHFE three-month zinc contract prices rose further to break RMB 15,000/mt in the afternoon session supported by strong SHFE copper prices, with prices finally closing at RMB 15,040/mt, up RMB 825/mt or 5.8%. Trading volumes decreased by over 40,000 lots to 538,346 lots, while positions fell by 2,258 lots to 217,626 lots.
In spot markets, as SHFE three-month zinc contract prices rallied again and moved around the daily moving average on Monday, spot premiums fell further. Traded prices for #0 zinc were between RMB 14,600-14,650/mt, with premiums against SHFE 1201 zinc contract prices between positive RMB 100-150/mt. Traded prices for #1 zinc were between RMB 14,600-14,650/mt, almost flat with prices for #0 zinc due to limited supply. In addition, market supply available was mainly #1 zinc imported from Kazakhstan, with domestic #1 zinc almost unavailable. Markets still lacked confidence in market outlook despite zinc price rallies, keeping trading sentiment neutral.
With regard to zinc price trends this week, 47% of market players believe zinc prices should continue to rebound, with SHFE three-month zinc contract prices moving between RMB 15,000-15,500/mt. They think the EU summit this Wednesday will produce good news to boost market sentiment. On the other hand, the US Federal Reserve is taking some measure to further ease monetary policies to boost US economic growth. In this context, the US dollar index will likely fall to 76, boosting metal prices. Supply surplus will ease, pushing up SHFE three-month zinc contract prices to RMB 15,000-15,500/mt. Spot goods should be traded between RMB 14,800-15,300/mt.
33% of market players believe SHFE three-month zinc contract prices should fluctuate between RMB 14,700-15,000/mt, and will barely rise. Spot goods prices should be between RMB 14,700-15,000/mt.
The remaining 20% believe SHFE three-month zinc contract prices will dip to RMB 14,300-14,700/mt, and spot prices will be between RMB 14,500-14,800/mt.