SMM Zinc Market Morning Review (2014-6-10)

SHANGHAI, Jun. 10 (SMM) – The PBOC lowered deposit reserve ratio overnight to boost market sentiment; the probe into finance-driven copper imports at the Port of Qingdao pushed down copper prices and drove capital into zinc and aluminum markets. LME zinc prices opened at USD 2,102/mt overnight, then surged to USD 2,145/mt at one point, a record high last seen in last February, and closing at USD 2,136.5/mt, up USD 36/mt or 1.71%. Trading volumes increased by 2,267 lots to 15,023 lots, and total positions increased 592 lots, to 30,000 lots. LME zinc inventories fell by 3,600 mt to 698,225 mt.

SHFE 1408 zinc contract prices opened higher at RMB 15,360/mt on Monday evening, then touched RMB 15,410/mt, a record high since February, and closing at RMB 15,375/mt. Trading volumes increased by over 20,000 lots to 44,000 lots, and total positions increased by 6,140 lots to 88,164 lots.

The market is optimistic toward China's CPI and PPI to be released today. LME zinc prices are expected to move between USD 2,120-2,150/mt today, and SHFE 1408 zinc contract prices will move between RMB 15,330-15,430/mt, with spot discounts between RMB 20-60/mt against SHFE 1408 zinc contract prices.