SHANGHAI, Feb. 7 (SMM) – In China's domestic markets, the most active SHFE 1305 zinc contract started at RMB 16,050/mt Wednesday and temporarily increased to RMB 16,095/mt in the morning. However, the contract then dipped below the daily moving average as short investors gradually took the upper hand, with prices hovering around 16,045/mt. In the afternoon, with short investors imposing more selling pressures, SHFE zinc prices fell all the way and slipped to an intraday low of RMB 15,910/mt. Nevertheless, with temporary support at the 10-day moving average, SHFE 1305 zinc contract rebounded slightly at the tail of trading before settling RMB 85/mt lower at RMB 15,960/mt. As the 5-day moving average became the resistance level, positions for the most active SHFE 1305 zinc contract decreased 8,660 lots to 165,110 lots.
In spot markets, with SHFE zinc prices holding flat, discounts of #0 zinc against SHFE 1305 zinc contract remained between RMB 400-420/mt, with traded prices largely between RMB 15,630-15,670/mt. Traded prices for #1 zinc held between RMB 15,590-15,610/mt. Zinc smelters expressed low interest in moving goods, but traders became more willing to sell in the face of narrowing discounts. However, downstream consumers were already closed for the Chinese New Year holiday, so overall market activity remained lackluster in the morning. In the afternoon, as SHFE zinc prices maintained soft, discounts of #0 zinc against SHFE 1305 zinc contract shrank marginally to RMB 390-400/mt, with traded prices also drifting down to RMB 15,580-15,590/mt. Market transactions were still not seen to improve, however.