Zinc Prices To Be Flat This Week

SHANGHAI, Aug 30 (SMM) - Focuses of this week should include: Industrial and Economic Climate Index for August in Eurozone, CPI on a monthly basis for August in Eurozone, final value of manufacturing PMI for August in Eurozone, US ADP payrolls and unemployment rate in August, and China official manufacturing PMI/Caixin manufacturing PMI in August. In terms of events, the 2021 Jackson Hole Economic Symposium was held last weekend.

2021 Jackson Hole Economic Symposium was held last weekend. Market focus should be laid on whether Taper will be determined this year and clear guidance on the reduction of debt purchases should be given; will the discussion on the impact of the pandemic be emphasised; will it be acknowledged that the current job market recovery is in line with expectations? These will directly affect the market sentiment. LME inventories have increased for 5 consecutive days since August 20, up 5,675 mt on the week. The contango of LME cash to 3-month contract returned to $10/mt. LME zinc prices are expected to stand at $2,930-3,030/mt this week.

The third batch of government stockpiles to be released kicked off last week on Friday, totalling 50,000 mt. It is far earlier than what the market has expected, but the volume fell below expectations. Nonetheless, this government reserves will effectively supplement the shortage of zinc ingot supply in September. Based on the expectations of bearish consumption, inventories are expected to accumulate slightly in September. Inventory-to-sales ratio valuation further suppressed zinc prices. The most-traded SHFE contracts prices are expected to stand at 22,000-22,700 yuan/mt this week, spot premiums of Shanghai zinc stood at 140-160 yuan/mt over the September contract.