SHANGHAI, Feb. 7 (SMM) – LME zinc prices started at USD 2,177/mt on Wednesday and were sent to a downside track following the opening, as the US dollar index increased after hovering temporarily. Political turmoil in Italy continued igniting market worries and caused the European stock markets to plunge. That, combined with the upcoming interest rate meeting of the European countries, heightened investors' risk aversion, helping the US dollar index surge above its 30-day moving average. As a consequence, LME zinc prices suffered selling again and slid to an intraday low of USD 2,155/mt. But with the US dollar retreating slightly to 79.75, LME zinc pared some of earlier losses and closed the day at USD 2,166/mt, down USD 13.8/mt. LME zinc stocks decreased 2,600 mt to 1,197,075 mt.
Investors generally hold the view that the British central bank and the ECB will keep their current interest rate unchanged, but investors will eye the impact of ECB President Mario Draghi's statements. As such, SMM believes that LME zinc prices will struggle around the 5-day moving average and move between USD 2,160-2,185/mt on Thursday. The most active SHFE 1305 zinc contract will drift slightly down to RMB 15,850-16,050/mt. Shanghai spot zinc market activity is expected to remain muted as discounts remain between RMB 380-400/mt against SHFE 1305 zinc contract.