SHANGHAI, Jul. 3 (SMM) – LME zinc prices overnight opened at USD 1,881/mt, and hovered between USD 1880-1890/mt during the day due to concerns over a sluggish Chinese demand and before the announcement of US non-farm employment data. Upbeat US factory orders and automobile sales boosted LME zinc prices to touch USD 1908.8/mt. But the US dollar index soared to a record high since June, and closed the day up 0.65%, pushing down LME zinc prices to fall back below USD 1,890/mt, and finally closing at USD 1,887/mt, up USD 4.3/mt or 0.23%. Trading volumes increased by 2,040 lots, to 10,219 lots, and total positions decreased by 275 lots, to 266,296 lots. LME zinc inventories fell by 5,675 mt, to 1,050,400 mt.
US data released overnight was positive. Although US July IBD/TIPP economic sentiment index was 47.1, below expectations and the previous month, US May factory orders rose by 2.1%, compared to 1% in the previous month. US home prices in May increased by 12%, the largest growth in seven years, and US June automobile sales also grew steadily, and expected to hit a record high in five and a half years.
Portuguese Finance Minister Vitor Gaspar resigned. He has been blamed for pushing tax increase and salary cuts policy since an agreement of the bailout plan was reached in 2011 and his resignation will likely affect if the country will exit bailout by the EU/IMF as planned. The Socialist Party then stated the government will fail and called for a new election. But the market believes the country will not hold an election soon as the governing coalition is supported by conservative president, and since it won the majority in the parliament. The European Central Bank (ECB), IMF and European Commission (EC) returned to Greece this week to assess if the country will receive additional EUR 8.1 billion of bailout funds as planned. It was believed international creditors will likely refuse to pay additional bailout funds and will pay the EUR 8.1 billion bailout funds in three times to weigh pressure on Greece and require Greece will accelerate reform. The ECB, IMF and EC may also require Greece to use additional tightening policies. Market capital thus flowed to the US dollar, pushing up the US dollar index by 0.5.
China's central bank inquired primary dealers yesterday concerning repurchasing in the open market and Central Bank Bills, but did not announce the issuance of Central Bank Bills. The central bank suspended Central Bank Bill issuance last Tuesday to stabilize liquidity; the Shanghai Composite Index closed above 2,000 yesterday, boosted by the growth enterprise market and medium-to-small enterprise stocks, and the market will continue to focus on medium-to-small enterprise stocks.
European and US stocks markets mostly dropped; LME base metals prices generally fluctuated.
LME zinc prices will move between USD 1,870-1,900/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,550-14,650/mt, with spot premiums against SHFE 1309 zinc contract prices between RMB 40-80/mt.