SHFE Zinc Prices Expected to Continue to Fluctuate This Week

SHANGHAI, Jan. 18 (SMM) -- Major SHFE zinc contracts opened low, but later moved higher following rising SHFE copper prices. Trading activity was active, with positions down significantly. The strengthened US dollar caused international commodities futures prices to decline on January 15th, and crude oil futures have fallen for five consecutive days. The US dollar index advanced, since the investors withdrew their capital from high-risk asset markets due to their concerns over the pace of global economic recovery.

The US Federal Reserve released that the industrial output in December rose by 0.6%, and the manufacturing data was better than expected, indicating the US manufacturing industry has been recovering. The positive industrial data helped offset the negative impact from falling consumer confidence index to some extent and limit the price declines in base metals. In the mean time, the US CPI in December grew by 0.1% MoM after revision, and the CPI increased by 2.7% on a yearly basis without revision, while economists predicted the CPI would increase by 0.2% on a monthly basis and grew by 2.8% on a yearly basis, and this data exerted very limited impact on the market. The US stock markets slipped on January 15th, with Dow Jones Industrial Average down 0.94%, and with Standard and Poor's Composite Index down 1.08%, and metals markets fluctuated as a result. SMM predicts SHFE zinc prices will fall slightly in the near term.

SHFE 1004 zinc contract opened at RMB 20,290/mt, and closed at RMB 20,550/mt, up RMB 5/mt compared with the previous trading day, with price fluctuation limit of 0.02%, and with the highest level and lowest level at RMB 20,575/mt and RMB 20,235/mt, respectively. Trading volumes of SHFE 1004 zinc contract reported 282,500 lots, and positions were 119,920 lots, with trading value reaching RMB 28.84 billion. SHFE spot-month zinc contract prices closed at RMB 20,190/mt.

Technically, SHFE three-month contract zinc prices moved below 5-day moving average line, showing signs of declining in the future, with prices expected to move in the RMB 19,800-20,700/mt range.

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