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SMM Zinc Market Morning Review (2013-7-4)
Jul 4,2013 09:56CST
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Short momentum mounted, pushing down major euro zone stocks and weighing down LME zinc prices to USD 1,870/mt.

SHANGHAI, Jul. 4 (SMM) – Euro zone June PMI released overnight fell short of expectations, and when combined with Portugal's political turmoil, short momentum mounted, pushing down major euro zone stocks and weighing down LME zinc prices to USD 1,870/mt. US ADP non-farm employment in June increased by 188,000, and the number of initial jobless claims decreased for a second consecutive week. But US Challenger layoffs in June were much higher than the previous month, with non-farm employment figures due to be announced this Friday uncertain and the market cautious. LME zinc prices fluctuated weakly between USD 1,870-1,885/mt, and finally closed at USD 1,875.3/mt, down USD 11.8/mt or 0.62%. Trading volumes increased by 209 lots, to 10,428 lots, and total positions increased by 3,425 lots, to 269,721 lots. LME zinc inventories fell by 6,700 mt, to 10,437,000 mt. The market was quiet due to US Independence Day holiday.

Concerns over European debt crisis increased again due to Portugal political chaos. Portugal Foreign Affairs Minister and right-wing Portuguese People's Party leader Portas submitted his resignation, and if he resigned, the People's Party will likely exit the governing coalition, so the governing party will be unable to win the majority of the parliament, which may lead to government collapse. As market concerns spread, Portugal's government bond yields surged to 8%, while the euro fell to a low of 1.29. But positive euro zone economic data boosted market confidence. Euro zone June Markit PMI was finally 48.7, a record high in 15 months, and Spanish and French service PMIs were both better than expectations, while Germany's service and comprehensive PMI was below expectations, but still above 50.

US ADP employment increased by 188,000, higher than 160,000 expected. The number of initial jobless claims last week was 343,000, also better than 345,000 expected. But US June ISM non-manufacturing index was 52.2, the lowest since February 2012, and trade deficit expanded to USD 45 billion.

Chinese Premier Li Keqiang held a State Council executive meeting July 3 concerning rectification and reform work and to activate reserve capital. The China (Shanghai) Free Trade Pilot Zone Plan and the Regulations of Foreigners Entry and Exit China were passed at the meeting.

European and US stocks markets were mixed; LME copper, lead and tin closed with gains, while other base metals dropped.

LME zinc prices will move between USD 1,860-1,890/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,500-14,600/mt, with spot premiums against SHFE 1309 zinc contract prices expanding to RMB 70-110/mt.


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