SMM Zinc Market Morning Review (2015-4-17)

SHANGHAI, Apr. 17 (SMM) – The US dollar index fell on sluggish major economic indicators from the US, bolstering base metals prices. LME zinc inventories fell to a new low. LME zinc prices rose but met resistance at USD 2,240/mt, and closed at USD 2,230.5/mt, up USD 26/mt or 1.18%. Trading volumes were up 9,575 to 82,543 lots, and total positions increased 110 to 299,223. LME zinc inventories fell 2,175 to 498,550 mt.

SHFE 1506 zinc contract prices opened high but moved lower overnight, falling to RMB 16,600/mt, and closed the day at RMB 16,590/mt, up RMB 55/mt or 0.33%. Trading volumes were down 18,538 to 63,496 lots, and total positions decreased 1,646 to 116,666.

With the exception of tin, LME base metals prices rose noticeably yesterday. The number of initial jobless claims in the US for the week ending April 11 increased 12,000, with seasonally adjusted totaling 294,000, hitting a six-week high but falling a touch short of market expectations. Housing starts in March were up 2% MoM, with seasonally adjusted annualized reaching 926,000, but lower than market expectations. Construction permits decreased 5.7% MoM, with the decline larger than expected. The sluggish economic data added to market uncertainties whether the Fed will hike interest rate soon. The US dollar index dropped sharply to as low as 97.28, and closed at 97.67, down 0.66%.

China will commence 60 construction projects this year. China’s A-share opened low but moved higher, pointing toward 4,200.

OPEC reports that US petroleum supply will increase to 13.65 million bbl per day in Q2, then level off, and is expected to fall in the latter half of this year. COMEX crude oil contract prices rose 32 cents/bbl or 0.6% to close at USD 56.71/bbl, hitting a new high of this year. Brent crude oil futures prices increased 1.04% and closed at USD 63.98/bbl, also lending a support to base metals prices.

LME zinc prices are expected to move between USD 2,200-2,240/mt today. SHFE 1506 zinc contract prices will fluctuate between RMB 16,550-16,650/mt, with spot discounts of RMB 150-80/mt against SHFE 1506 zinc contract prices.