Long-tail Effect of Banking Crisis Lingered, leading to a V-shaped Trend in both Domestic and Overseas Zinc Markets

SHANGHAI, Mar 27 (SMM) - LME zinc: The overseas market was still rattled by the macro front last week. At the beginning of the week, the University of Michigan Surveys of Consumers said the one-year inflation outlook plummeted to 3.8%; the US dollar index continued to sink as the market expected the Fed to raise interest rates by 25 basis points. Since the risk aversion in the market outweighed the hopes for a possible halt in Fed's rate hikes when the banking crisis stoked the concerns over a faltering economy, the bearish market sentiment sent LME zinc prices falling. Subsequently, the Fed raised interest rates by 25 basis points as expected, but thankfully Powell's doveish speech boosted the market sentiment somehow. LME zinc prices thus climbed slightly and fluctuated. The US treasury secretary Yellen later changed her tune and said that "actions will be taken to protect deposits if necessary" when the market was still digesting the expectations that the Fed's interest rate hike will halt soon. As a result, LME zinc prices jumped and pared losses. Generally speaking, LME zinc showed a V-shaped trend last week. As of 15: 00 CST last Friday, LME zinc stood at $2,926.5/mt, a decrease of $6.5/mt, or 0.22% on a weekly basis.

SHFE zinc: The domestic market was disturbed by poor downstream consumption last week. At the beginning of the week, the domestic market was still absorbing the long-tail effect brought about by the banking crisis. This, coupled with falling SHFE zinc prices, dragged down SHFE zinc prices. Fortunately, the destocking of zinc ingot social inventory across seven major markets in China supported SHFE zinc prices to stabilise. However, the environmental protection-related control in Hebei affected the operating rates of downstream enterprises there, thus the weaker consumption of zinc ingots caused zinc prices to inch lower. Eventually, the bearish market sentiment was alleviated by Yellen's speech. The end of environmental protection-related production restrictions and the ongoing traditional peak season provided momentum for SHFE zinc prices, which, similar to LME zinc prices, rose again and recovered previous losses. As of 15: 00 CST last Friday, SHFE zinc closed at 22,680 yuan/mt, an increase of 290 yuan/mt or 1.3% from the previous week.