SMM Morning Comment For Zinc Market On October 31

SHANGHAI, October 31(SMM) –The U.S. Treasury Department cut its Q4 borrowing forecast to $776 billion. The Eurozone economic sentiment index changed little in October; the Chinese Ministry of Finance guided the long-term and steady investment of insurance funds; China will announce the official October manufacturing PMI today, which may be unchanged at 50.2. LME zinc opened at $2457/mt on Monday, with high and low at $2486/mt and $2457/mt, closing at $2466.5/mt, up 0.02%. Trading volume fell 1161 lots to 5968 lots, and open interest fell 880 lots to 200,000 lots, LME zinc inventory rose 5085 mt to 81600 mt. The U.S. Treasury Department unexpectedly lowered its net borrowing forecast for this quarter. However, the plunge in crude oil combined with the U.S. Dallas Fed Business Activity Index recorded -19.2 in October, as well as rising LME zinc inventories sent LME zinc prices down in European session. Overnight, the SHFE-traded SHFE 2312 zinc contract opened at 21305 yuan/mt, with high and low at 21360 yuan/mt and 21105 yuan/mt before closing at 21145 yuan/mt, down 125 yuan/mt or 0.59%. Trading volume fell 81302 lots to 64,200 lots, and open interest fell 3559 lots to 80,700 lots. From a fundamentals perspective, SMM data shows zinc inventories in seven major regions in China increased by 2,100 mt from October 27 to 99,000 mt. Downstream demand was relatively poor. The lackluster fundamentals provided little support for zinc prices. We need to pay attention to China official manufacturing PMI to be released today.