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SMM Zinc Market Morning Review (2013-6-26)
Jun 26,2013 10:04CST
price review forecast
LME zinc prices overnight opened at USD 1,824/mt.

SHANGHAI, Jun. 26 (SMM) – LME zinc prices overnight opened at USD 1,824/mt. Asia-Pacific stocks markets continued to fall during Asian trading hours, with the Shanghai Composite Index tumbling to 1,849.65, its record low since early January 2009. LME zinc prices dipped to USD 1,816.3/mt, the second lowest in the year, casing market panic and weighing down financial markets and commodity prices. LME zinc prices pulled down to USD 1,815/mt. In the afternoon, rumors said that China's State Council required financial institutions to make plans resolving monetary shortfalls, and Shanghai held the 2013 Lujiazui Forum press conference. The Shanghai Composite Index rebounded, and closed the day down 0.19%, with market concerns over China easing. LME zinc prices climbed to USD 1,840/mt. US housing data and durable goods orders topped expectations, and Conference Board's June CCI hit a record high from January 2008, reflecting US economic is recovering. In this context, LME zinc prices touched USD 1,845.3/mt, and finally closed at USD 1,846.3/mt, up USD 23.8/mt, or 1.3%. Trading volumes decreased by 472 lots, to 10,254 lots, and total positions increased by 969 lots, to 265,814 lots. LME zinc inventories grew by 2,550 mt, to 1,068,400 mt.

China's A-shares and base metals fell in the morning Asian trading session due to apprehension over liquidity crunch in China, with A-shares tumbling to the lowest since February 2009 at 1,849 points. Financial markets, however, rebounded in the afternoon session, which some believe is attributable to anticipation that the People's Bank of China (PBOC) will send signals of loose monetary policy during the 2013 Lujiazui Forum press conference held in the afternoon. No clear signal was sent during the conference, though. Nevertheless, the PBOC released last night an article titled Adjusting Liquidity within Rational Level, Stabilizing Monetary Market, which showed the central bank's intention of injecting liquidity. The article says that although current liquidity is not in shortage, the PBOC has recently provided support to qualified financial institutions. The PBOC did not launch open market operations yesterday morning, with no issuance of 3-month Central Bank Bills and no initiation of repos or reverse repos. Markets are now expecting the central bank to resume reverse repos.            

In the US, S&P/Case-Shiller data showed that home price composite index in 20 US cities rose 2.5% in April, the largest monthly growth on record. The Conference Board announced the US Consumer Confidence Index advanced from 76.2 to 81.4 in June, well above the 75.1 forecast. Durable goods orders in May grew 3.6% MoM, excluding a 0.7% growth in transport durable goods orders and a 9.3% gain in non-national defense capital new orders.      

European and US stocks closed up. LME base metals closed with gains across the board.

LME zinc prices will move between USD 1,830-1,865/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,380-14,510/mt, with spot premiums against SHFE 1309 zinc contract prices between RMB 60-100/mt.


LME zinc prices

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