SMM Zinc Market Morning Review (2015-1-30)

SHANGHAI, Jan. 30 (SMM) – Germany’s January CPI and PPI hit a new low since July 2009, pointing to a growing deflationary pressure. LME zinc prices opened at USD 2,116/mt, and dropped to as low as USD 2,075/mt during European trading hours, then rebounded. But the number of US initial jobless claims last week were upbeat, causing the US dollar index to rebound. This pushed down LME zinc prices to close at USD 2,093/mt, down USD 24/mt or 1.13%. Trading volumes were up 1,944 to 8,490 lots, and total positions decreased 2,691 to 282,611. LME zinc inventories fell 3,550 to 633,175 mt.

SHFE 1504 zinc contract prices opened at RMB 16,020/mt Thursday evening, then fluctuated around RMB 16,030/mt, and closed at RMB 16,010/mt, down RMB 165/mt or 1.02%. Trading volumes decreased 4,768 to 75,094 lots, and total positions increased 2,744 to 149,544.

US Q4 growth slated for release today is expected to fall short of market expectations. Upbeat data should accelerate interest rate hike by the Fed, which will boost the US dollar index whilst pushing down base metals. LME zinc prices are expected to move between USD 2,075-2,105/mt. SHFE 1504 zinc contract prices will fluctuate between RMB 15,950-16,050/mt, with spot premiums between RMB 60-120/mt against SHFE 1503 zinc contract prices and RMB 130-180/mt against SHFE 1504 zinc contract prices.