SHANGHAI, Feb 24 (SMM) - On the news front, the US president Joe Biden called on US allies, one year after the start of Russia-Ukraine war, to impose new sanctions on Russia. The initial jobless claims in the United States last week dropped unexpectedly, suggesting that the US labour force market remained intense and stoking people's concerns that Fed's rate hikes might be above the forecast. The inflation rate in the eurozone fell from 9.2% last December to 8.6% this January, slightly higher than the 8.5% initial value released earlier. The core inflation rate in the eurozone rose from 5.2% to 5.3%.
LME zinc opened at $3,067/mt overnight and closed down $40/mt or 1.3% at $3,033/mt. The trading volume was 5,258 lots, and open interest lost 762 lots to 197,000 lots. LME inventory declined by 375 mt to 30,650 mt. The weak fundamental support overseas, together with the liquidity pressure brought by Fed’s accelerating the pace of rate hikes, lifted US dollar and dragged down LME zinc.
Overnight, the most-traded SHFE 2304 zinc contract opened at 23,500 yuan/mt and fell slightly to close at 23,425 yuan/mt, down 80 yuan/mt or 0.34%. Trading volume stood at 39,000 lots, and open interest gained by 2,110 lots to 91,000 lots.
The actual end consumption in the zinc market was slow in recovery, and the domestic projects were challenged by limited capitals. The export orders were still slack despite that the freight rates already declined to pre-pandemic levels. In addition, previous retreat of zinc prices had caused downstream enterprises to restock on dips, which resulted in persisting sluggish spot trades over the past two weeks. In general, the supply has been growing steadily while the consumption is picking up slowly. Given the limited fundamental support for zinc prices, investors are warned against downside risks.
