SMM Zinc Market Morning Review (2013-2-8)

SHANGHAI, Feb. 8 (SMM) – LME zinc prices started at USD 2,167.3/mt Thursday and then slipped below the 5-day moving average. During the Asian trading session, as short investors took the upper hand, LME zinc prices dipped to an intraday low of USD 2,144/mt, but gained support at the 10-day moving average before rebounding. In the evening, the European Central Bank (ECB) announced to leave the interest rate policy unchanged, and ECB President Mario Draghi's statements failed to lift market sentiment. In addition, the US initial jobless claims last week came in higher than expected, but still below the previous data. Against this backdrop, LME zinc prices fluctuated around USD 2,160/mt and finally ended at USD 2,157.3/mt, a loss of USD 8.8/mt. LME zinc stocks decreased 1,050 mt to 1,196,025 mt.

Draghi's comments depressed market sentiment Thursday and helped the US dollar increase appreciably. Base metals thus came under pressures. Nevertheless, investors are positive towards China's trade, CPI and PPI data to be released Friday. As such, LME zinc prices are likely to test support at the 10-day moving average and move between USD 2,040-2,070/mt Friday. The most active SHFE 1305 zinc contract will fluctuate between RMB 15,800-15,950/mt. Shanghai spot zinc discounts are estimated between RMB 320-360/mt against SHFE 1305 zinc contract.