About 23% Chinese Investors Bullish toward Zinc, SMM Survey

SHANGHAI, Jul. 26 (SMM) – SMM survey of 30 industry insiders finds that 50% are neutral, expecting LME zinc to fluctuate between USD 2,230-2,290/mt and SHFE 1609 zinc to fluctuate between RMB 17,200-17,600/mt. Yuan’s devaluation appeared to have been arrested recently. The Fed and Bank of Japan will announce their interest rate decision this week. Japanese government said it will likely push a stimulus program totaling JPY 20 trillion in July, so the Bank of Japan may leave rate unchanged. US manufacturing PMI and inflation improved recently, but it is still uncertain if the Fed will raise rate in H2, increasing market uncertainty.

See SMM Price Forecast Please Click: Zinc to Consolidate at Highs Next Week, SMM Foresees

About 23% are bullish toward zinc price trends this week, expecting LME zinc to advance to USD 2,300/mt, and SHFE 1609 zinc to climb to RMB 17,800/mt. Domestic zinc concentrate TCs fall RMB 100/mt from July to RMB 4,700-4,900/mt(Zn content) in August, with quotes below RMB 5,000/mt at most smelters. Domestic zinc concentrate TCs are expected to slide further. SMM understands mines in Hunan’s Huayuan were forced to suspend production as local explosive supply was cut off due to inspections, which will affect zinc ore supply. NBS data show zinc output fell 2.5% YoY in June. Besides, some smelters cut output. Investors are awaiting further output cut at smelters caused by further declines in zinc concentrate TCs. Positions on SHFE zinc reached 560,000.

Some 27% are bearish, seeing LME zinc fall to USD 2,200/mt. SHFE 1609 zinc is expected to drop to RMB 17,000/mt. They think zinc prices have absorbed positive news from fundamentals. Cargo holders report slow sales with the onset of off-season, constraining price gains in spot zinc. Downstream buyers are curtailing raw material inventories and stay on the sidelines. Smelters having profit at current TCs will be unwilling to slash output, leaving supply in surplus.