33% Investors Expect Zinc to Climb, SMM Survey

SHANGHAI, Dec. 15 (SMM) –SHFE 1602 zinc surged last Friday due to rumors that China’s State Reserve will build metal reserves, and remained high on Monday. Will zinc price maintain upward momentum this week?

See SMM price forecast, please click:Market Caution to Dominate LME Zinc Next Week, SMM Says

SMM survey of over 30 investors finds 44% expect LME zinc to remain at USD 1,520-1,580/mt and SHFE 1602 zinc to fluctuate between RMB 12,500-13,000/mt. News of metal buyout in China helped improve market sentiment, but will unlikely give further boost to zinc. In China’s spot markets, few zinc smelters held back goods. SHFE zinc inventories grew 7,904 to 194,898 mt last Friday. When combined with a large inflow of imported zinc, domestic zinc prices will be pushed down. Cargo holders are selling at lower prices due to market pessimism. But downstream buyers refrained from building stocks due to year-end cash tightness.

33% are bullish, expecting LME zinc to rise to USD 1,600/mt and SHFE 1602 zinc to climb to RMB 13,200/mt. Value added at China’s industrials grew in November, and retail sales hit a new high for the year, benefiting from China’s stimulus measures released previously. It was reported Chinese aluminum smelters will cut output significantly, and capacity shut down will not be restarted. When combined with rumor of China’s metal buyout, copper and nickel led price gains last week. This should also send up zinc prices.

23% are bearish, seeing LME zinc to fall to USD 1,500/mt and SHFE 1602 zinc to drop to RMB 12,400/mt. Crude oil prices are on their way down, depressing the market. Market expectations of an interest rate hike by the Fed in December also increased. US core CPI in November is expected to reach 2%, a level required by the Fed as a precondition to an interest rate hike. This will drive up the US dollar index and in turn weigh down zinc prices.