SHANGHAI, Feb 17 (SMM) - On the news front, the Federal Reserve's Mester said that inflation was still too high and it entailed further interest rate hikes. The US labour market was still tense with the January PPI hitting a seven-month high. Standing Committee of the Political Bureau of the CPC Central Committee said that the covid-19 was under control but regular monitoring would be strengthened. The EU planned to gradually lift the restrictions on travellers from China in terms of covid-19 checks.
LME zinc opened at $3,011/mt on Thursday night, touching a high and a low of $3,052.5/mt and $2,982.5/mt respectively. Afterwards, softer US dollar prompted LME zinc to rally and close up $32.5/mt or 1.08% to $3,037.5/mt. The trading volume rose to 8,246 lots, and open interest lost 1,041 lots to 199,000 lots.
LME zinc inventory increased sharply by 4,775 mt to 29,850 mt, an increase of 19.04%.
The economic data released by the United States recently showed that inflationary pressures were still high, and the Fed’s hawkish speech enhanced the market expectations for rate hikes. As a result, LME zinc was depressed and fell to a one-month low.
Overnight, the most-traded SHFE 2303 zinc contract nosedived after opening at 22,840 yuan/mt, and touched a low of 22,705 yuan/mt. Afterwards, it rallied and touched a high of 22,875 yuan/mt before settling at 22,845 yuan/mt, up 70 yuan/mt or 0.31%. Trading volume was down to 36,555 lots, and open interest gained by 750 lots to 79,843 lots.
Although there are strong expectations for increasing supply at home and abroad, the signs of end consumption recovery points to a slow accumulation of domestic social inventory. It is expected that the short-term zinc price will have limited room for decline.
