SMM Zinc Market Morning Review (2015-6-3)

Published: Jun 3, 2015 09:25

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Eurozone May CPI topped market expectations.

SHANGHAI, Jun. 3 (SMM) – Eurozone May CPI topped market expectations. When combined with easing Greek crisis, market sentiment was lifted. But US economic indicators released overnight were sluggish, pushing down the US dollar index and giving some support to base metals prices.

LME zinc prices opened at USD 2,154/mt, then touched USD 2,183/mt, and closed at USD 2,157.85/mt, up USD 2.85/mt or 0.13%. Trading volumes increased 4,053 to 105,000 lots, and total positions decreased 3,194 to over 319,400. LME zinc inventories fell 2,050 to 450,000 mt.

SHFE 1508 zinc contract prices opened at RMB 16,530/mt Tuesday evening, then touched RMB 16,640/mt, but fell back to RMB 16,500/mt on selling pressure, and closed at RMB 16,510/mt, down RMB 20/mt or 0.12%. Trading volumes increased 7,384 to 64,710 lots, and total positions grew 3,746 to 3,746.

The euro surged on alleviating Greek crisis. Eurozone May CPI was up 0.3%, while core CPI increased 0.9%, both higher than expected, meaning eurozone economy is stabilizing.

US factory orders in April declined 0.4% MoM, and durable goods orders fell 1% MoM, which are worse than expected and March’s level. This pushed down US stocks and the US dollar index.

The PBOC announced China’s Pledged Supplementary Lending (PSL) balance in late May was RMB 645.9 billion, with new PSL during the first five months of this year RMB 262.8 billion. The PSL interest rate is now 3.10%, down 31% from the 4.5% last July. The PBOC has injected capital through PSL to increase liquidity and reduce borrowing costs. Another Chinese company defaulted this week.

The US dollar index fell 1.55%; the EUR:USD climbed 2.04%；US stocks decreased. European stocks were mixed. With the exception of aluminum and lead, LME base metals prices rose.

LME zinc prices are expected to move between USD 2,150-2,180/mt today. SHFE 1508 zinc contract prices will fluctuate between RMB 16,450-16,550/mt, with spot discounts of RMB 80-50/mt against SHFE 1507 zinc contract prices and RMB 100-70/mt against SHFE 1508 zinc contract prices.

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