SHANGHAI, Mar 16 (SMM) – The Fed raised interest rates by 25 basis points in February, but the inflation was still high, suggesting that the Fed will raise the interest rate further. The US January ISM manufacturing PMI dropped to 47.4, the lowest level since May 2020. Demand from many downstream sectors was sluggish, thus LME zinc prices fell again. The spectacular non-farm data in the US rekindled market concerns over Fed interest rate hikes, pushing down LME zinc prices significantly. The non-farm sector added an astonishing 517,000 jobs after seasonal adjustment in January; the unemployment rate recorded 3.4%, hitting a 53-year low. The monthly rate of US retail sales in January was 3% higher than expected, suggesting that inflation can hardly decline in the short term. The strong retail sales data strengthened investors’ expectations for the Fed to maintain a tight monetary policy.

Meanwhile, the Auby smelter in France announced that it would resume production in early March, and thus the supply side put pressure on LME zinc prices. US PCE in January fuelled market expectations that the Fed would keep raising interest rates even with lower inflation. China’s domestic recovery has been a focus of markets and supported SHFE zinc prices. The Sentix investor confidence index in the eurozone recorded -8 in February, a new high since March 2022. To a certain extent, the market has been boosted. Low LME zinc inventories also underpinned LME zinc prices.