SMM Zinc Market Morning Review (2013-7-29)

SHANGHAI, Jul. 29 (SMM) – Asian and European stocks mostly dropped last Friday. University of Michigan's July CCI hit a record high since March 2007, boosting US stocks to rise across the board. But many investment banks were bearish towards base metals market, and JP Morgan announced it would exit commodity market, which triggered market apprehension. LME zinc prices opened at USD 1,879/mt, and then plummeted due to selling pressure, and finally closed at USD 1,949/mt, down USD 28/mt, or 1.49%. Trading volumes increased by 1,451 lots, to 8,639 lots, and total positions increased by 506 lots, to 250,173 lots. LME zinc inventories fell by 4,275 mt, to 1,051,025 mt.

Base metals prices were affected by concerns over China's demand. The list of outdated capacity elimination in 19 industries was released, and the market was concerned slower Chinese economic growth and sliding manufacturing will reduce demand for base metals. Besides, investment banks are selling spot base metals, and JP Morgan announced last Friday it would seek for strategic substitute for spot commodity business, including selling and quitting spot commodity business, or implement strategic cooperation with those business, which pushed down base metals prices.

University of Michigan's July CCI was 85.1, a record high since March 2007, but this did not boost the US dollar index as the market took a wait-and-see attitude if stimulus policies will be enhanced due to Japan's rising inflation data. The US dollar against JPY dropped by over 1%.

European and US stocks were mixed, with US socks remaining strong. LME base metals prices mostly fell.

LME zinc prices will move between USD 1,830-1,860/mt today, and SHFE 1310 zinc contract prices should fluctuate between RMB 14,430-14,530/mt, with spot premiums against SHFE 1310 zinc contract prices expanding to RMB 110-150/mt.