SMM Zinc Weekly Price Review and Forecast (Oct. 20-24, 2014)

SHANGHAI, Oct. 20 (SMM) – In China's spot markets, #0 zinc price drop was not as significant as SHFE zinc price, causing spot premiums against SHFE 1412 zinc contract prices to expand from RMB 180-240/mt to RMB 300/mt. Smelters held back from selling on slumping zinc prices, but traders still having arbitrage opportunities moved goods actively. When combined with shipments arriving from south China, Shanghai's supply tightness improved. Downstream buyers entered the market as zinc prices fell below RMB 17,000/mt, causing overall transactions to improve.

Smelters will hold onto their goods at lower prices this week, while traders will sell enthusiastically due to arbitrage opportunities. When combined with goods releases after delivery, supply tightness will mitigate. Downstream buying interest will increase as zinc prices stabilize at low levels, with spot premiums against SHFE three-month zinc contract prices remaining between RMB 250-350/mt.