SMM Zinc Weekly Price Review and Forecast (Apr. 13-17, 2015)

SHANGHAI, Apr. 13 (SMM) – Spot #0 zinc prices in Shanghai climbed in tandem with zinc futures, with discounts of RMB 100/mt against SHFE 1506 zinc contract prices. Cargo holders believed the falling SMM/LME zinc price ratio should constrain imported zinc inflows, tightening supply, so they held back goods and kept prices firm. Traders purchased at lows, but cheap resources were limited. Downstream buyers purchased as needed at RMB 16,000/mt. Trading improved in the latter half of the week thanks to bargain hunters.

Premiums on #0 zinc price in Tianjin against Shanghai prices inverted from RMB 10-20/mt to discounts of RMB 0-10/mt. Zinc prices in Tianjin were stable as cargo holders held prices firm. Downstream demand weakened, though, as galvanizers in Tianjin’s Daqiu Village suspended production for a week due to ongoing environmental protection inspections.

#0 zinc prices in Guangdong remained RMB 0-10/mt above Shanghai prices. Spot prices held steady as cargo holders kept prices firm. Qilin and Tiefeng zinc was quoted RMB 80-100/mt below SHFE 1506 zinc contract prices. Traders pushed for lower prices. Downstream buyers purchased limitedly. #1 zinc demand was strong thanks to galvanized tube/pipe producers.

In China’s spot markets, some smelters will stay on the sidelines on rising prices this week. Market expectations that zinc imports will decrease on falling SMM/LME zinc price ratio will allow cargo holders to hold onto their goods. Downstream buyers should purchase on an as-needed basis. Spot discounts against SHFE 1506 zinc contract prices are expected to hover around RMB 100/mt.