US FOMC Meeting and the Performance of Post-Holiday Stocks This Week Remain as the Market Focus

SHANGHAI, Sep 22 (SMM) - Market focus this week include: the annualised reading of new housing starts in the United States in August, the initial value of the manufacturing PMI in the Eurozone in September, and the initial value of the Markit manufacturing PMI in the United States in September; China's one-year loan market quotation interest rate as of September 22. In terms of events, FOMC will announced the interest rate resolutions this Thursday; the Fed Chairman Powell will hold a press conference; and the European Central Bank will announces an economic bulletin.

The FOMC meeting will soon kick off this week, at which the latest interest rate resolution will be announced. The market participants believe that the Fed is unlikely to emphasise the topics of tapering or reducing debt purchases at this meeting due to the Covid-19 pandemic. LME stocks increased 4,250 mt, indicating that there are undisclosed stocks in the overseas market. The contango of LME cash to 3-month contract stood at $10/mt. LME zinc is expected to stand at $3,050-3,140/mt this week.

Guangxi Nandan Nanfang Metal and Jilang cut 20% of its production amid power rationing while the affected output at China-Tin Group reached 70-80%. Judging from the current situation, the output in September is likely to reduce by about 2,000 mt from the original estimate. Jiangsu, which has failed to meet the energy consumption requirements, was also affected seriously by power rationing, impacting on the downstream companies. Some plants have saw reduction of production by 20% and others were even required to suspend production until after the National Day. The weak orders have caused the downstream companies to suspend production during the Mid-Autumn Festival. SMM believes the high season is unlikely to show bullish consumption. Inventory trended lower this week amid pre-holiday restocking and shift of inventory from Tianjin to east China. Zinc prices will fluctuate and the domestic market will be closed for two days in the Mid-Autumn Festival next week. The SHFE contract prices are expected to stand at 22,500-23,300 yuan/mt next week, spot premiums of Shanghai zinc stand at 150-190 yuan/mt over the October contract.