Zinc Prices Increased on Overseas Energy Problems

SHANGHAI, Dec 20 (SMM) – LME zinc fell to $3,283/mt in the first half of last week as the continuous deliveries in Asia led to increasing LME inventory and bearish sentiment pervaded on the announcement of bond-buying tampering by the Fed. Approaching the weekend, Nexa, the world's fourth largest zinc producer, announced that it would stop mining in Peru, coupled with the recurrence of European energy problems and strong bullish sentiment, resulting in a significant rebound in LME zinc that rose to a high of $3,457/mt. At present, the low inventory status in Europe and America still existed, and LME cash-to-three-month structure was still at a high level, supporting zinc prices. LME zinc closed at $3,430/mt, up $130/mt or 3.9%, with open interest decreasing by 17,634 lots to 244,000 lots. SHFE zinc showed V-shaped trend, and rebounded greatly after falling below 23,000 yuan/mt.

SHFE zinc prices fluctuated at high levels last week as social inventory of zinc ingots continued to decline and was at a low level. LME stocks continued to increase on December 14. Although the delivery was happened in Singapore, the market sentiment has been affected by increasing inventory. Besides, the bearish expectations of the Fed's meeting on interest rates were strong. Therefore, zinc prices kept falling. At the end of the weekend, LME zinc stood firm due to Nexa’s suspension of mining activities in Peru and Nyrstar’s announcement that it would start maintenance of its zinc project in response to the news of electricity price hike. SHFE zinc also followed suit. SHFE zinc closed at 24,150 yuan/mt, up 1,000 yuan/mt or 4.32%, with open interest increasing by 873 lots to 72,969 lots.