SHANGHAI, Jul. 14 (SMM) – Spot discounts on #0 zinc against the SHFE 1409 zinc contract price narrowed from RMB 130-180/mt to RMB 100/mt last week. New shipment arrivals were limited by maintenance at smelters and transportation disruptions. Some arbitrage traders sold actively as spot discounts narrowed, raising the number of zinc brands available. In the meantime, some optimistic traders were buying aggressively. Downstream buyers, though, remained in a wait-and-see posture. Trading was brisk, but mostly among traders.
In China's spot markets, high zinc prices will encourage smelters to increase sales, but some brands will remain in short supply due to maintenance. Traders are expected to enter the market as big price volatility proffers them trading opportunity, but downstream buying interest will be weak since high temperatures are negatively affecting operating rate to some extent Nevertheless, brisk orders from the shipbuilding, galvanized steel tower and power sector will give support to spot zinc consumption. Spot discounts against SHFE 1409 zinc contract prices are expected to narrow to RMB 50-150/mt.