SHANGHAI, Aug. 30 (SMM) – Zinc outperformed other base metals last week. SHFE three-month zinc breached RMB 18,000/mt.

See SMM Price Forecast Please Click:LME Zinc to Rebound Next Week, SMM Says

SMM survey of 30 industry insiders finds that about 43% are neutral, expecting LME zinc to fluctuate between USD 2,280-2,330/mt and SHFE 1610 zinc to hover between RMB 17,600-18,100/mt. Zinc has better fundamentals. But Fed Chairwoman Janet Yellen said last Friday the case for a rate hike is strengthening, driving up the US dollar index. This should constrain price gains in zinc. Technical factor will also remain a drag on zinc.

47% are bullish toward zinc price trends this week, expecting LME zinc to point towards USD 2,400/mt, and SHFE 1610 zinc to climb to RMB 18,500/mt. TCs of domestic zinc concentrate fell RMB 100/mt to RMB 4,600-4,800/mt (Zn content) in September. Concentrate supply in Hunan’s Huayuan shrank further due to strict environmental protection inspections, and this led to declines in output at some smelters. Besides, total inventories in Shanghai, Tianjin and Guangdong fell further. As arriving shipments in Shanghai contracted further, spot prices should remain above SHFE three-month zinc. SHFE near-term contracts were above SHFE forward-month contracts, also reflecting supply tightness of spot zinc.

Some 10% are bearish, seeing LME zinc fall to USD 2,300/mt. SHFE 1610 zinc is expected to drop to RMB 17,500/mt. Overnight Shanghai Interbank Offered Rate (Shibor) climbed all the way, meaning tightening liquidity. The People’s Bank of China (PBOC) restarted 14-day reverse repurchase, helping the Shibor stabilize. Market expectations of sufficient liquidity weakened. Positions on SHFE zinc hit an all-time high of 650,000, and a large number of longs may retreat from the market after profit-taking.