17% Chinese Investors Bullish toward Zinc, SMM Survey

SHANGHAI, Jun. 28 (SMM) – The pound slumped over 10% after the UK voted to leave the EU, and the US dollar index touched 96. LME zinc dipped to USD 1,962/mt.

See SMM Price Forecast Please Click: LME and SHFE Zinc to Consolidate at Current Level, SMM Says

SMM survey of 30 industry insiders finds that 66% are neutral, expecting LME zinc to fluctuate between USD 1,980-2,050/mt and SHFE 1608 zinc to fluctuate between RMB 15,500-15,800/mt. A majority supported the UK to leave the EU, and over 3 million British called for another vote. When combined with UK Prime Minister David Cameron’s resignation and Scotland calling for another referendum on independence from the UK, risk appetite remains.

Some 17% are bearish, seeing LME zinc fall to USD 1,950/mt. SHFE 1608 zinc is expected to drop to RMB 15,200/mt. US inflation rate slated for release this week is expected to improve to 1.7%. The US dollar index gained ground after Brexit. Despite decreasing market expectations of a Fed rate hike in the near term, the US dollar index should hover around 96 in the near term, weighing down base metals. China’s manufacturing data in May due for release in the latter half of this week are not promising. On the fundamental front, zinc inventories in the three regions stopped falling and hovered around 330,000 mt. Smelters and cargo holders will liquidate inventories in the middle of the year. The low-demand season will weigh on spot zinc. Total positions on SHFE zinc decreased nearly 20,000 last week.

About 17% are bullish toward zinc price trends this week, expecting LME zinc to advance to USD 2,100/mt, and SHFE 1608 zinc to breach RMB 16,000/mt. Domestic zinc concentrate TCs continued to fall, with mainstream of RMB 4,900-5,100/mt last week, reflecting tightening ore supply. TCs for imported zinc concentrate were below USD 100/mt. Option positions are expected to increase at USD 2,000-2,100/mt.