SMM Zinc Market Daily Review (2012-12-31)

SHANGHAI, Jan. 4 (SMM) - LME zinc prices plummeted last Friday. SHFE three-month zinc contract prices started the day lower at RMB 15,420/mt. HSBC’s December PMI for China was 51.5, much better than the 50.9 expected. China’s manufacturing continued to improve, so the Shanghai Composite opened high and moved higher, reaching a near-half-year high. As a result, SHFE three-month zinc contract prices soared and broke through three  moving averages, touching RMB 15,570/mt in the afternoon, but then falling back to RMB 15,530/mt. Finally, SHFE and finally closed at RMB 15,520/mt, down RMB 30/mt. Total position decreased by 9,964 lots to 91,694 lots.

SHFE zinc prices opened lower but then inched up. Discounts of #0 zinc against SHFE three-month zinc contract prices were between RMB 300-320/mt, with traded prices between RMB 15,180-15,200/mt. #1 zinc prices were RMB 15,140-15,150/mt. Smelters lacked interest to move goods, leading to supply tightness. Some arbitrage traders released goods modestly due to narrowing spot discounts, but downstream buying interest was low, keeping overall transactions muted.