Zinc Prices to be Flat This Week

SHANGHAI, Sep 6 (SMM) - Focus of this week should include: ZEW Economic Prosperity Index in September in Eurozone, PPI Monthly Rate in August in America; China CPI Annual Rate in August, and social electricity consumption in August. In terms of events, the Fed will release the Beige Book of economic conditions next Thursday and European Central Bank will announce the interest rate resolution.

Fed Chairman Powell made a dovish statement at Jackson Hole Annual Meeting that the Fed may reduce the scale of bond purchases this year, but will not rush to raise interest rates, alleviating the market's concerns about the content of the August FOMC conference. On the other hand, China manufacturing PMI in August fell to 50.1% while that in America and Eurozone also fell. LME zinc inventories declined slightly. The contango of LME cash to the three-month contract maintained at $10/mt. LME zinc prices are expected to stand at $2,960-3,030/mt this week.

On SHFE zinc side, downstream plants maintained rigid demand while the current supply-demand structure is not enough to suppress zinc prices.  No. of bidders for government stockpiles increased from last batch, with the  maximum transaction price rising to about 21,800 yuan/mt, but there was still a price spread of 600-900 yuan/mt between governmental stockpiles prices and market spot price. It is within the acceptance range of downstream enterprises. Companies are expected to receive cargoes after next Friday the soonest. Spot pressure will increase in approaching that delivery time. Stocks are expected to increase in September. The most-traded SHFE contracts are expected to stand at 22,000-22,600 yuan/mt this week, spot premiums of Shanghai zinc stood at 180-200 yuan/mt over the October contract.