SMM Zinc Market Morning Review (2015-5-7)

SHANGHAI, May 7 (SMM) – The US dollar index fell overnight whilst crude oil prices rose, but this failed to boost base metals prices. LME zinc prices opened at USD 2,391/mt, and failed to touch USD 2,400/mt, then dipped to as low as USD 2,353/mt, and closed at USD 2,358.5/mt, down USD 38.5/mt or 1.61%. Trading volumes decreased 2,518 to 13,577 lots, and total positions grew 7,302 to 310,971. LME zinc inventories fell 6,200 to 459,750 mt.

SHFE 1507 zinc contract prices opened at RMB 17,350/mt Wednesday evening, then dropped to RMB 17,200/mt, and closed at RMB 17,215/mt, down RMB 155/mt or 0.89%. Trading volumes decreased 46,156 to 93,310 lots, and total positions declined 6,246 to 173,970.

Only 169,000 jobs were added in the US private sector in April, falling far short of the 200,000 expected. ADP’s employment data for the US in April were also much lower than expected, boding ill for the non-farm employment data slated for release this Friday. The US dollar index was sold off, while the euro saw a large inflow of capital due to rising government bond yields.

EIA crude oil inventories in the US for the week ending May 2 unexpectedly decreased 3.88 million bbl, and falling for the first time in the last four months, pushing up crude oil prices significantly to a new high for the year, but losing some early gains during US trading session.

Euro zone April PMI was 53.9, topping market expectations and March’s level. Euro zone service PMI in April was 54.1, also above market expectations and March’s level.

China’s April PMI was 51.3, dropping to a new low in three months. Service PMI in April was 52.9.

The US dollar index decreased 1.05%. The EUR:USD rose 1.44%. European and US stocks markets mostly fell, and the Shanghai Composite Index slumped 1%. LME base metals prices declined across the board except for tin.

LME zinc prices are expected to move between USD 2,355-2,395/mt today. SHFE 1507 zinc contract prices will fluctuate between RMB 17,160-17,270/mt, with spot discounts of RMB 130-90/mt against SHFE 1507 zinc contract prices.