Shanghai, May 14 (SMM) - In China's domestic spot markets, discounts against SHFE three-month zinc contract prices narrowed from RMB 160-170/mt early in the week to RMB 100-120/mt, and with spot prices between RMB 15,200-15,300/mt. Since zinc prices were low, downstream buying interest improved. However since smelters were holding goods, goods supply was insufficient. As discounts narrowed with falling zinc prices, some traders took advantage of arbitrage opportunities.
Last week, spot inventories did not change significantly. Spot inventories in East China grew 3,000 mt to 480,400 mt. Inventories in South China fell 8,200 mt, to 92,300 mt, while inventories in North China remained unchanged at 16,000 mt. As the third Wednesday of the month nears, LME zinc inventories surged to a high 930,000 mt, an indication that consumption remains weak.
This week, LME zinc prices should move between USD 1,920-1,950/mt next week, and SHFE three-month zinc contract prices should fall to RMB 15,000/mt, with spot discounts narrowing to RMB 80-130/mt.