SHANGHAI, Nov. 27 (SMM) - LME zinc prices will fall and test support from the 10-day moving average next week, fluctuating between $1,550-1,620 per tonne, SMM says.

Chinese economy is on the way down, and the US dollar remains strong, both weighing down zinc prices, SMM explained.

“China’s manufacturing PMI slated for release next week is not promising. But China’s State Reserve Bureau(SRB) will reportedly build zinc reserves in the near term. If the SRB really decided to build zinc stocks in large amount, zinc prices will receive a boost and will reach $1,650,”said an SMM zinc analyst.

February delivery zinc on the SHFE is expected to fall to 12,600-13,200 yuan per tonne with shorts returning to the market. Should the SRB stockpiling news be verified, prices will reach 13,500 yuan per tonne.

In China’s spot markets, spot zinc will trade 100-200 yuan above SHFE zinc for January delivery. Zinc smelters will liquidate inventories to generate cash at the year’s end, and inflows of imported zinc will also add to supplies. However, demand will weaken as low temperatures constrain downstream production, weighing on spot price. 

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