Only 10% Chinese Investors Bullish toward Zinc, SMM Survey-Shanghai Metals Market

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Only 10% Chinese Investors Bullish toward Zinc, SMM Survey

Price Review & Forecast 10:53:14AM Feb 16, 2016 Source:SMM

SHANGHAI, Feb. 16 (SMM) - SMM survey of over 30 industry insiders finds that 60% are neutral toward zinc price trends this week, expecting LME zinc to hover between USD 1,670-1,730/mt. Offshore yuan rose significantly during the Chinese New Year holiday, and onshore yuan surged over 800 on the first trading day after the holiday to breach 6.49 at one point. The SMM/LME zinc price ratio is thus expected to fall. Trading will remain weak in the first week following the holiday, with investors remaining cautious. SHFE 1604 zinc should remain range-bound.

Some 30% are bearish, expecting LME zinc to fall below USD 1,650/mt, and SHFE 1604 zinc to drop to RMB 13,300/mt. LME zinc inventories fell 5,000 mt during the holiday. But spot zinc in China stayed high. Combined zinc inventories in the three regions grew over 50,000 mt to above 350,000 mt. As some downstream buyers have yet to return to the market, spot discounts should expand, in turn weighing on zinc prices.

About 10% are bullish, seeing LME zinc rebound to USD 1,750/mt, and SHFE 1604 zinc rise to RMB 14,100/mt. Contango inverted to backwardation on LME zinc. Term TCs were signed at USD 180-190/mt between some mines and smelters, and market expects term TCs this year to be much lower than the same period of last year. This, coupled with technical indicators, will lend some support to zinc prices in the near term.


Only 10% Chinese Investors Bullish toward Zinc, SMM Survey

Price Review & Forecast 10:53:14AM Feb 16, 2016 Source:SMM

SHANGHAI, Feb. 16 (SMM) - SMM survey of over 30 industry insiders finds that 60% are neutral toward zinc price trends this week, expecting LME zinc to hover between USD 1,670-1,730/mt. Offshore yuan rose significantly during the Chinese New Year holiday, and onshore yuan surged over 800 on the first trading day after the holiday to breach 6.49 at one point. The SMM/LME zinc price ratio is thus expected to fall. Trading will remain weak in the first week following the holiday, with investors remaining cautious. SHFE 1604 zinc should remain range-bound.

Some 30% are bearish, expecting LME zinc to fall below USD 1,650/mt, and SHFE 1604 zinc to drop to RMB 13,300/mt. LME zinc inventories fell 5,000 mt during the holiday. But spot zinc in China stayed high. Combined zinc inventories in the three regions grew over 50,000 mt to above 350,000 mt. As some downstream buyers have yet to return to the market, spot discounts should expand, in turn weighing on zinc prices.

About 10% are bullish, seeing LME zinc rebound to USD 1,750/mt, and SHFE 1604 zinc rise to RMB 14,100/mt. Contango inverted to backwardation on LME zinc. Term TCs were signed at USD 180-190/mt between some mines and smelters, and market expects term TCs this year to be much lower than the same period of last year. This, coupled with technical indicators, will lend some support to zinc prices in the near term.