SMM Zinc Market Morning Review (2013-3-5)

SHANGHAI, Mar. 5 (SMM) – Chinese stock markets led losses among Asian stock markets yesterday, weighing zinc prices down. China introduced tougher measures to cool domestic property sector, causing most real estate shares to plummet by 10%, with the Shanghai Composite Index down 3.65%, its biggest decline since September 2011. Property sector is the major downstream industry of zinc. Tighter measures on domestic housing markets sparked worries over zinc consumption in China. LME zinc fell after opening at USD 2,030/mt as most stock markets in Asia closed with losses during Asian trading hours. US Federal Reserve Chairman Bernanke reiterated overnight his support for QE, boosting market confidence somewhat and sending the US dollar index down. Against this backdrop, LME zinc found support at USD 2,000/mt after slipping to USD 1,995/mt. Finally, LME zinc closed at USD 2,007/mt, down USD 21/mt or 1.04%. Trading volumes were down 1,881 lots to 13,466 lots, while positions also decreased 4,620 lots to 272,607 lots. LME zinc inventories fell 1,750 mt to 1,198,300 mt.

Markets are eyeing the final result of Australia’s March interest rate meeting and whether favorable policies will be introduced from the upcoming National People's Conference (NPC) and the Chinese People's Political Consultative Conference (CPPCC) sessions. LME zinc should continue to test support at USD 2,000/mt and move within USD 1,995-2,020/mt on Tuesday. SHFE 1305 zinc contract prices should fluctuate in the range of RMB 15,200-15,350/mt, with spot discounts expected between RMB 200-240/mt.