47% Chinese Investors Bullish toward Zinc Price, SMM Survey

SHANGHAI, Jun. 7 (SMM) – SMM survey of 30 industry insiders finds that about 47% are bullish toward zinc price trends this week, expecting LME zinc to challenge USD 2,050/mt, and SHFE 1608 zinc to breach RMB 16,000/mt. US non-farm sector only added 38,000 jobs in May, raising expectations that the Fed will unlikely hike interest rate in June. This pushed down the US dollar index and bolstering base metals. Zinc concentrate supplies decreased with decreasing inflows of imported ore. Raw material inventories at zinc smelters mostly dropped to one month of production. Domestic zinc concentrate TCs were lowered further to below RMB 5,000/mt (zinc content) at a few smelters. As an increasing number of zinc smelters will undertake maintenance in June, the average operating rate should fall in June from May, tightening zinc supply. This will also lend support to zinc.

See SMM Price Forecast Please Click:LME Zinc to Fall Next Week, SMM Foresees

43% are neutral, expecting LME zinc to fluctuate between USD 1,970-2,030/mt and SHFE 1608 zinc to fluctuate between RMB 15,500-15,900/mt. Despite tightening ore supply in China, restarts at overseas mines and releases of hedged goods will add to supply. The low-demand season set in. meanwhile, positions on SHFE zinc reached 430,000, and trading volumes were above 600,000 lots. With exodus of investors ahead of the Dragon Boat Festival in China, zinc price volatility should be constrained.

Some 10% are bearish, seeing LME zinc fall to USD 1,950/mt. SHFE 1608 zinc is expected to dip to RMB 15,200/mt. Mid-year liquidity crunch at banks will compound pressure on commodity market. More respondents in the UK supported a Brexit from the EU recently, depressing market sentiment. Exodus of longs after profit-taking will also weigh on zinc. Zinc will lack ability to rise due to the slack season and lower-than-expected decline in zinc inventories.