SHANGHAI, Jul. 17 (SMM) – LME zinc prices overnight opened at USD 1,891/mt. Drove up by US stocks overnight, Asian stocks closed with gains, increasing market sentiment. But Citigroup, Macquarie Bank and HSBC lowered their expectations of base metals prices, curbing zinc price increases. After Asian trading, Standard Chartered lowered expectations of China's GDP growth in 2013 from 7.7%, to 7.5%, and Moody's anticipated assets quality of Chinese banking sector will deteriorate. UK's June CPI rose by 2.9%, is largest growth in 14 months, undermining expectations that the Bank of UK will use additional easing policies, and causing selloffs to increase. LME zinc prices were pushed down and found support at the 10-day moving average. US capacity utilization rate in June topped expectations, and the US dollar index plunged 0.74%, supporting LME zinc prices to rally to USD 1,890/mt, and closing at USD 1,890/mt.
Trading volumes decreased by 203 lots, to 5,514 lots, and total positions decreased by 3,374 lots, to 256,419 lots. LME zinc inventories fell by 1,325 mt, to 1,001,325 mt. US Federal Reserve officials took a mixed attitude towards monetary policies, with the market cautious prior to Ben Bernanke's testimony. The market will also focus on UK June unemployment rate and US June housing data.
The market overnight was still focused on US GDP growth in Q2. US June CCI hit a record high, but June retail sales data was below expectations. Investors are concerned positive employment data diverged US real economy. Goldman Sachs, Barclay and RBS all lowered US Q2 GDP growth expectations below 1%, with growing expectation that Bernanke will continue to support easing policies. The US dollar index plunged by 0.7%, and US NAHB July property market index rose to 57, its record high since January 2006, and US June industry output grew by the largest in four months, to 0.3%, boosting base metals prices.
News from Europe was generally negative. Germany's July ZEW economic sentiment index dropped to 36.3, lower than the 40 expected. Spain's political instability increased due to the slush fund scandal of Spain's Prime Minister Mariano Rajoya and his party.
European and US stocks closed with declines; LME base metals prices generally rose.
LME zinc prices will move between USD 1,875-1,905/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,650-14,750/mt, with spot premiums against SHFE 1309 zinc contract prices narrowing to RMB 50-90/mt.