SHANGHAI, Nov. 22 (SMM) - SHFE zinc staged a 2-day winning streak after wild fluctuation, with spot zinc in Shanghai up over 600 yuan per tonne November 21.
Let’s take a look at the zinc market over the past week. SHFE zinc breached 21,000 yuan per tonne and rose by daily limit November 15, but fell back to 21,000 yuan per tonne later on as positions changed significantly. Investors took a mixed attitude against high zinc prices, SMM said.
What’s the price trend for zinc in the medium term?
Zinc fundamentals are still promising in the medium term, and will be balanced in the long term, SMM said. Market fundamental will continue to dominate the market in Q4 and Q1 2017. In light of falling TCs of zinc concentrate and lower raw material inventories, zinc smelters may suspend production in Q1 2017. This may help LME zinc breach $3,000 per tonne, $3,500 per tonne, or even higher. Nonetheless, there are still some uncertainties from macroeconomic front, such as liquidity, investment, US dollar and Chinese yuan’s trend, SMM added.
Meanwhile, market sentiment is also important for zinc prices. Zinc has been inflated recently. And whether the upward momentum will sustain is still uncertain.
We are cautiously optimistic toward future zinc prices, which will remain strong in Q1 2017, SMM predicts. But prices will fall during Q2-Q3 next year. So investors are still suggested to control risks.
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