SMM Zinc Market Daily Review (2014-7-1)

SHANGHAI, Jul. 2 (SMM) – SHFE 1409 zinc contract prices opened at RMB 15,975/mt on Monday evening, and broke through RMB 16,000/mt since LME zinc prices breached USD 2,200/mt, touching RMB 16,140/mt, a record high since last February, and closing at RMB 16,045/mt, up RMB 100/mt or 0.63%. SHFE 1409 zinc contract prices opened at RMB 16,050/mt on Tuesday. China’s official PMI in June rose for the fourth straight month, reflecting China’s economy is improving. But SHFE 1409 zinc contract prices touched RMB 16,090/mt then rolled back most early gains after the positive economic news was absorbed and since a large number of investors left the market after profit-taking, but finding support at RMB 15,900/mt, and closing at RMB 16,040/mt, up RMB 195/mt or 1.23%. Trading volumes increased by 21,268 lots, to 114,458 lots, and total positions of SHFE 1409 zinc contracts increased by 5,032 lots to 181,910 lots. Total positions increased by 122,804 lots to 241,982 lots.
 
#0 zinc prices were between RMB 15,730-15,780/mt, with spot discounts of RMB 170-220/mt against SHFE 1409 zinc contract prices. #1 zinc prices were between RMB 15,660-15,680/mt. SHFE 1409 zinc contract prices dropped to RMB 15,910-15,960/mt yesterday, but spot zinc prices were firm. SMM #0 zinc prices were only RMB 20/mt below the record high of RMB 15,750/mt hit in 2013, stimulating smelters to sell. Arbitrage traders were holding prices firm, and downstream buying interest was low, with transactions mainly made among traders. Prices for deliverable brands were much higher than those for non-deliverable brands.

Shuangyan branded #0 prices were between RMB 15,750-15,780/mt, and RMB 15,740-15,760/mt for Yuguang and Huize branded #0 zinc. Prices for Qinxin branded zinc were RMB 15,730-15,740/mt. Imported zinc supply was ample, with prices for AZ brand around RMB 15,730-15,740/mt, RMB 15730/mt for SMC brand, and RMB 15,700-15,720/mt for other brands. SHFE 1409 zinc contract prices stabilized at RMB 16,000/mt, with #0 zinc prices between RMB 15,780-15,810/mt.