SMM Zinc Market Morning Review (2015-3-27)

SHANGHAI, Mar. 27 (SMM) – Major economic indicators released yesterday were mixed. LME zinc prices opened at USD 2,080/mt, then stabilized during Asian trading hours. Boosted by crude oil and gold prices, LME zinc prices surged to a five-week high of USD 2,128.5/mt during European and US trading session. Nonetheless, concerns over high crude oil inventories, combined with rising US dollar index from upbeat initial jobless claims for the US last week, allowed LME zinc prices to roll back early gains, closing at USD 2,081/mt, down USD 1.5/mt or 0.07%. Trading volumes were up 5,221 to 13,298 lots, and total positions increased 3,732 to 289,063. LME zinc inventories fell 50 to 520,125 mt.

SHFE 1506 zinc contract prices opened at RMB 16,030/mt Thursday evening, and rose to RMB 16,075/mt, then fell to fluctuate between RMB 15,990-16,020/mt, and closed the day at RMB 16,010/mt, up RMB 40/mt or 0.25%. Trading volumes increased 11,336 to 48,670 lots, and total positions decreased 886 to 124,364.

Growing geopolitical tensions in the Middle East fueled risk aversion, causing gold and crude oil prices to surge. Base metals prices also soared. But a rising US dollar index weighed down base metals prices, which followed their own trends. Global stocks markets dropped across the board due to think risk aversion.

The number of US initial jobless claims last week was 282,000, its lowest over the past five weeks, and falling short of market expectations. This suggests US job market continues to recover. Markit’s March PMI for the US also topped market expectations. Atlanta Federal Reserve chairman said a strengthening US economy may lead to a sooner interest rates hike by the Fed. In this scenario, the US dollar index rose, and closed the day with gains, weighing on base metals prices.

Margins at China’s industrials in February slated for release this morning will not affect the market significantly. Market anticipations of additional supportive measures for the property market increased.

The US dollar index rose 0.48%, with the EUR:USD down 0.77%. Global stocks markets fell across the board. LME base metals prices diverged.

LME zinc prices are expected to move between USD 2,075-2,105/mt today. SHFE 1506 zinc contract prices will fluctuate between RMB 15,950-16,050/mt, with spot discounts of RMB 150-110/mt against SHFE 1505 zinc contract prices.