SMM Zinc Market Morning Review (2014-11-17)

SHANGHAI, Nov. 17 (SMM) – Major economic indicators from Europe and the US released last Friday were upbeat. University of Michigan’s November CCI hit a record high, but October inflation is expected to slide. The Fed is thus expected to push stimulus measures, pushing down the US dollar index and driving up base metals.

LME zinc prices opened at USD 2,248.75/mt, fluctuating around USD 2,245/mt during Asian trading, then edged up to USD 2,260/mt, and closing the day at USD 2,264.75/mt, up USD 19.75/mt or 0.88%. Trading volumes were down 682 to 6,534 lots, and total positions increased 10,551 to 315,895 lots. LME zinc inventories fell 2,050 to 687,450 mt.

SHFE 1501 zinc contract prices opened at RMB 16,620/mt last Friday evening, then rose to USD 16,700-16,755/mt, push up by a large number of longs, and closing at RMB 16,720/mt, up RMB 75/mt or 0.45%. Trading volumes were up 6,748 to 186,310 lots, and total positions increased 1,772 to 163,708 lots.

A falling US dollar index will support base metals prices. When combined with the commencement of Shanghai-Hong Kong stock connection and promising New York Fed’s November manufacturing index and October industrial output figures, LME zinc prices will fluctuate between USD 2,250-2,280/mt today. SHFE 1501 zinc contract prices will move between RMB 16,670-16,800/mt, with spot premiums between RMB 240-310/mt against SHFE 1501 zinc contract prices.