SMM Zinc Weekly Price Review and Forecast (Oct. 27-31, 2014)

SHANGHAI, Oct. 27 (SMM) – In China's spot markets, spot premiums of #0 zinc against SHFE 1412 zinc contract prices widened from RMB 180-350/mt a week earlier to RMB 240-360/mt last week. Supply was tight early in the week as smelters held back from selling, but supply tightness improved later the week due to goods releases from arbitrage traders and imported zinc inflows. High spot premiums constrained buying interest. Downstream buyers only purchased modestly at lower prices early in the week, then turned cautious, leaving overall trading muted.

Arriving shipments of imported zinc will increase this week due to the improving SHFE/LME zinc price ratio. As cargo holders liquidate inventories to generate cash at month's end, supply of regular brands will be sufficient, excluding Shuangyan and Yuguang. This will cause the price spread to expand. Downstream buying interest, however, will remain low due to liquidity concerns. Spot premiums are expected to narrow to RMB 250-330/mt.