Higher zinc futures weighed on spot premiums in Shanghai

SHANGHAI, Dec 9 (SMM) – Premiums of spot zinc weakened on the morning of December 9 in Shanghai, as cargo holders were keen to destock after higher futures prices sidelined downstream consumers.

At noon on Monday, the #0 common brands were mostly offered at a premium of 230-240 yuan/mt, over the SHFE December contract, down from as high as 300 yuan/mt in early trades. 

Inflow of seaborne zinc and arrivals of more zinc ingot in the trading market also accelerated the decline in spot zinc premiums. Despite reduced premiums, downstream buyers were cautious about purchasing amid continued price rally of Shanghai zinc. 

At noon, #0 zinc traded at 18,495-18,525 yuan/mt, and #1 zinc at 18,425-18,455 yuan/mt in Shanghai.

In the northern Chinese market of Tianjin, transactions cooled from last Friday as smog-control measures put local downstream producers under 30-50% capacity cuts and deterred their purchases of raw materials. 

At noon of December 9, offers of #0 common brands zinc stood at a premium of 180-200 yuan/mt over the SHFE December contract, with premiums of high-quality brands at around 250 yuan/mt. 

The Tianjin-Shanghai price spread narrowed from a discount of 80 yuan/mt last Friday to a discount of 30 yuan/mt. Trades of #0 zinc ingot occurred at 18,450-20,090 yuan/mt in Tianjin on Monday. 

The SHFE December contract extended a price rally on December 9 and closed the morning trading session at 18,305 yuan/mt, up 0.38% from that time on December 6.