23% Chinese Investors Still Bullish toward Zinc, SMM Survey

SHANGHAI, Feb. 2 (SMM) - SMM survey of over 30 industry insiders finds that 57% are neutral, expecting LME zinc to hover between USD 1,570-1,630/mt and SHFE 1604 zinc to fluctuate between RMB 12,900-13,300/mt. It is unlikely that the People’s Bank of China (PBOC) will lower interest rate and reserve requirement ratio any time soon. Base metals will be constrained by capital front. Smelters sell normally, while some traders suspended production. Trading under term contracts slackened, and most downstream buyers have exited the market ahead of the Chinese New Year holiday. Both longs and shorts left the market due to risk aversion, with positions on SHFE zinc down 26,000 in two consecutive days.

See SMM price forecast, please click:LME Zinc to Consolidate at Highs Next Week

About 23% are bullish, seeing LME zinc rebound to USD 1,650-1,680/mt, and SHFE 1604 zinc rise to RMB 13,500-13,700/mt. WTI March crude oil breached USD 34/bbl, helping improve market sentiment.

Some 20% are bearish, expecting LME zinc to fall below USD 1,550/mt, and SHFE 1604 zinc to drop to RMB 12,700/mt. China’s official and Caixin PMI in January released on Monday remained below 50, meaning slower manufacturing. Weak market fundamentals will also negatively affect zinc. Trading inventories stayed above 330,000 mt, and stocks in the three regions will continue growing, weighing on zinc.