SHANGHAI, Sept. 15 (SMM) – SHFE 1511 zinc contract prices opened at RMB 14,825/mt last Friday evening, then dipped to RMB 14735/mt with LME zinc prices but then rallied to RMB 14,800/mt, and closed at RMB 14,830/mt, down RMB 50/mt or 0.34%. Trading volumes were down 10,430 to 44,952 lots, and total positions decreased 1,546 to 132,212. SHFE 1511 zinc contract prices opened at RMB 14,835/mt Monday, then fell back down. As the Shanghai Composite Index plunged, SHFE 1511 zinc contract prices plummeted to RMB 14,685/mt, and closed at RMB 14,695/mt, down RMB 185/mt or 1.24%. Trading volumes decreased 6,758 to 114,000 lots, and total positions fell 5,504 to 126,000.
#0 zinc prices were between RMB 14,770-14,820/mt, RMB 40/mt below or RMB 30/mt above SHFE 1511 zinc contract prices. #1 zinc traded at RMB 14,680-14,690/mt. Discounts of imported zinc were RMB 240-200/mt. Trading was quiet early after opening, with spot discounts widening to RMB 50-40/mt. AS SHFE zinc prices fell after 11:00 am, some traders rushed to the market, with spot discounts of some brands narrowing to RMB 30/mt. Some smelters held back goods, but supply was healthy. Downstream buyers purchased as needed, with trading improving and mainly made between traders. #0 zinc was traded between RMB 14,750-14,800/mt in the afternoon, with spot premiums of #0 zinc widening.
LME zinc prices stabilized above USD 1,800/mt last week. SMM surveyed over 30 industry insiders to find that 64% are neutral toward zinc prices. Zinc prices are expected to technically rebound, but the lack of positive news will constrain any price gains, leaving LME zinc prices between USD 1,780-1,840/mt. SHFE 1511 zinc contract prices will hover between RMB 14,600-15,000/mt. The likelihood of a Fed interest rate hike in September is limited, but expectations grew that the Fed will raise the rate at the year’s end. Uncertainty toward the trend of the US dollar increased, giving no directions to the US dollar.
23% are bearish, seeing LME zinc prices falling to USD 1,700-1,760/mt, and SHFE 1511 zinc contract prices down to RMB 14,500/mt. Crude oil prices extended losses, while gold prices are still in check. Market sentiment did not improve. Meanwhile, operating rates at zinc smelters climbed to 80% in September, with few smelters cutting output. When combined with large inflows of imported zinc, supply is ample, weighing on zinc prices. Investors also lack confidence as positions remain largely unchanged.
13% are bullish, believing LME zinc prices will above USD 1,860/mt and SHFE 1511 zinc contract prices will stand at RMB 15,000/mt. The US dollar will fall given sluggish economies worldwide, bolstering commodity market. In the meantime, some plants restarted in September. When combined with investment in power grid, downstream demand should stabilize, lending support to zinc prices.