50% Chinese Investors Bearish toward Zinc, SMM Survey

SHANGHAI, May 24 (SMM) – SMM survey of 30 industry insiders finds that about 50% are bearish, seeing LME zinc fall to USD 1,800/mt. SHFE 1607 zinc is expected to fall to RMB 14,500/mt. Hawkish Fed meeting minutes and Fed officials’ support for rate hike in June will lend support to the US dollar index. US Q1 GDP and Personal Consumption Expenditures due for release this week are expected to improve, also driving up the US dollar index. Meanwhile, US rig count stopped decreasing, and crude oil hovered around USD 50/bbl. Restarts at steel plants and onset of low-demand period for steel will drag down ferrous metals. This will negatively affect zinc prices.

See SMM Price Forecast Please Click:Rising Likelihood of Fed Hike to Keep LME Zinc in Check Next Week

About 33% are neutral, expecting LME zinc to fluctuate between USD 1,820-1,880/mt and SHFE 1607 zinc to fluctuate between RMB 14,600-15,100/mt. Zinc concentrate output and imports slid, tightening domestic ore supply. TCs of domestic zinc concentrate were lowered in some regions, boding well for zinc prices in the medium to long run. But zinc consumption will lack ability to grow due to the slow season. Declines in zinc inventories slowed. Positions on SHFE zinc decreased to 303,000, meaning limited upward and downward room for zinc.

About 17% are bullish toward zinc price trends this week, expecting LME zinc to challenge USD 1,900/mt, and SHFE 1607 zinc to reach RMB 15,200/mt. They base their opinion on ore supply tightness. Some zinc smelters lowered domestic zinc concentrate TCs to as low as RMB 5,000/mt, and zinc concentrate inventories at some smelters were below one month of production. Zinc consumption is still better compared with the same period of last year.