Diverging Trends Intensify among Bases Metals with Zinc as Best Performer(April 25-29, 2016)

SHANGHAI, Apr. 29 (SMM) – China's regulators employed measures to control excessive speculation in ferrous metal market, which weighed on nonferrous metals prices. Profits for Chinese above-scale industrial enterprises posted large growth in March, which however, posed limited positive effect. Economic figures from US were mixed and US Fed unsurprisingly kept rate unchanged at April rate meeting. Neutral statement of Fed officials weakened expectation for rate hike in June. US dollar thus dropped below 94. Crude oil prices broke though USD 46/bbl thanks to falling output in US.

As such, base metals started rebounding from lows later this week and erased some losses. SMMI once slid 1.48% on Monday and only dropped 0.36% at the end of this week.

Diverging trends strengthened in base metals market with zinc, aluminum and nickel performing well. SMMI.Zn led gains at 1.28%. SHFE zinc prices continued falling. Supply of imports was limited and offered at almost the same prices as domestic materials. Traders thus held offers firm. Downstream producers built stocks for holiday and this pushed trading up. SHFE aluminum bounced back from lows and fundamentals stayed unchanged. Cargo holders held offers firm and traders rushed to replenished stocks. SMMI.Al increased 0.68%. LME nickel gained 2.88% and SHFE nickel grew 1.16%. Jinchuan Group lifted ex-works prices from RMB 400/mt to RMB 71,000/mt. SMMI.Ni posted gains of 0.22%.

SHFE tin slipped 3% but spot tin only fell 0.66% as tin smelters held prices strong. SMMI.Cu dropped 0.93%. SHFE copper slid below the 5 and 10-day moving averages but spot disounts narrowed. SMMI.Pb tumbled 1.3%. Downstream battery sectors remained in slack season and demand weakened further at the end of this month. Declines of other metals also drove down lead prices.

Robust crude oil prices will lead base metals prices heading into May with fundamentals unchanged.