SHANGHAI, Jun. 27 (SMM) – LME zinc prices overnight opened at USD 1,841.5/mt. The People's Bank of China (PBOC) limited liquidity injection failed to ease market concerns, and China's stocks stopped rebounding, with the Shanghai Composite Index closing the day with declines of 0.41%, and China's demand concerned. LME zinc prices surged before falling, dipping to USD 1,828.5/mt. Germany's Gfk July CCI was better than forecasts, but US Q1 GDP fell short of expectations, helping ease concerns that the US Federal Reserve will back off QE soon, and boosting LME zinc prices to jump above the 5-day moving average, finally closing at USD 1,840/mt, down USD 5.8/mt or 0.31%. Trading volumes decreased by 3,759 lots, to 6,459 lots, and total positions increased by 3,044 lots, to 268,858 lots. LME zinc inventories fell by 5,450 mt, to 1,062,950 mt.
The US Commerce Department announced that the US final 1Q GDP grew a mere 1.8%, well below forecasts and the previous figure of 2.4%, due largely to downward revision in consumer spending, enterprise investment and exports. Consumer spending was revised down from 3.4% growth to 2.6%, enterprise investment was cut from 2.2% growth to 0.4%, and exports were revised from 0.8% growth to -1.1%. US stocks slid due to depressed data, but later recouped earlier losses on weakening expectations for QE3 exit.
The European Central Bank (ECB) is nowhere near exiting from its accommodative monetary policy, ECB President Mario Draghi said Tuesday. He expects monetary stimulus and improvement in financial markets to help the European economy recover later this year. His stance helped cheer investors up given the rumor of US QE3 exit and liquidity crunch in China.
The US dollar index continued to rise. LME base metals closed with losses, though rising during the European session.
LME zinc prices will move between USD 1,825-1,850/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,300-14,450/mt, with spot premiums against SHFE 1309 zinc contract prices between RMB 80-120/mt.