SHANGHAI, Jun. 5 (SMM) – LME zinc prices overnight opened at USD 1,943/mt, but plunged to USD 1,930-1,935/mt due to selling pressure. Euro zone PPI dropped 0.2%, its first declines from February 2010, fueling expectations that the European central bank will further loosen monetary policies, boosting European stocks and the euro. In this context, LME zinc prices closed at USD 1,953.8/mt, up USD 7.8/mt or 0.4%. Trading volumes decreased by 5,740 lots, to 11,920 lots, and total positions increased by 3,325 lots, to 263,232 lots. LME zinc inventories fell by 4,025 mt, to 1,082,325 mt.
The market lacked macroeconomic news overnight, with the market continuing to absorb supports to base metals from decreasing copper ore supply from Indonesian Grasberg copper mine. US trade deficit expanded to USD 40.3 billion but was better than forecasts. Kansas Fed Chairman George appealed the US Federal Reserve wind down assets purchasing, and pointed out that debit balances in security margin accounts at broker-dealers hit a record high in April, increasing expectations that the Fed will contract assets purchasing plan. Some capital flowed out of the US stock markets, weighing down base metal prices.
Eurozone April PPI dropped for two consecutive months by 0.6%, and the largest decline since July 2009, with the annual rate down for the first time since February 2010 by 0.2%. Data shows euro zone CPI will likely continue to rise in the next few months so that European central bank may further loosen its monetary policy.
Shinzo Abe appeals investments from Japanese endowment insurance funds in the stock market should be increased, boosting the Nikkei Index to soar by 2.05%. Japanese Prime Minister Shinzo Abe will announce government economic strategy today.
National Energy Administration Electric Power Department Deputy Director Hao Weiping reported China's power consumption in May was 405.1 billion KWH, up 4.8% YoY, with the growth higher than the previous month but still a low in recent years, indicating China's economic recovery is still modest.
The US dollar index fluctuated below 83, up 0.12%; US stocks markets mostly fell, with the euro against the US dollar up 0.03%; Asian stocks markets were mixed. LME base metals prices closed with gains except for tin.
US will release its ADP job data, and the market will remain cautious ahead of the data, restraining metal price increases. Shanghai base metals prices are expected to open high but move lower today.
LME zinc prices will move between USD 1,930-1,960/mt today, and SHFE 1309 zinc contract prices should fluctuate between RMB 14,770-14,920/mt, with spot prices ranging from RMB 20/mt below or RMB 20/mt above SHFE 1309 zinc contract price.