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SMM: Zinc Goes down Thoroughly, Who is Dragging behind?

iconOct 19, 2017 09:50
Source:SMM
SHFE Zinc main 1712 Contract opens low last night, plunging to 20-day and 40-day moving average with the lowest point of 24,830 yuan per tonne, testing support of 60-day moving average.

SHANGHAI, Oct. 18 (SMM)--SHFE Zinc main 1712 Contract opens low last night, plunging to 20-day and 40-day moving average with the lowest point of 24,830 yuan per tonne, testing support of 60-day moving average.

Zinc price retraces after rising high, with resistance at high point and then goes down thoroughly. SMM thinks this is mainly because:

Firstly, LME inventories has increased by 20,000 tonnes to 270,000 tonnes since October. Also the number of LME cancelled warrants has reduced greatly by 62,575 tonnes to 65,900 tonnes during the day, which is hard to support the zinc price.

Secondly, SMM did a research in September and found that the launching rate of main zinc smelting plants is 76.62%, rising 4.31% MoM. The estimated launching rate in October will rise to 78.9%, with slight increase of supply.

Thirdly, Despite launching condition of zinc oxide and die casting zinc alloys plants has been stable. Galvanizing plants has reduced or suspended their production due to green policy in North. SMM predicts launching rate of galvanizing plants in October will weaken. Influenced by short-term consumption, zinc price will probably keep volatile and drop, slowing down upward tendency.


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