SMM Zinc Market Morning Review (2015-4-27)

SHANGHAI, Apr. 27 (SMM) – LME zinc prices opened at USD 2,219/mt last Friday and climbed to USD 2,219/mt aided by a pullback in the US dollar index and the narrowing contango in LME zinc. The prices finally ended at USD 2,245/mt, up USD 21.5/mt.

Trading volumes fell by 25 lots and positions declined 167. LME zinc inventories declined 2,600 mt to 481,375 mt.

SHFE 1507 zinc contract started at RMB 16,670/mt during night session last Friday and moved between RMB 16,610-16,740/mt before ending at RMB 16,685/mt, up RMB 130/mt. Positions in the July delivery zinc continued to grow.

Eyes will be on China’s Q1 above-scale industrial profits due out Monday. Lead is expected to be strong today on weak US dollar. Yuguang Gold & Lead Co. and Jinli Gold & Lead Co. will resume operation by the end of this month and early next month, but it takes some days before their products enter the market. In addition, traders refrained from selling before, lending support to spot lead prices.

Last Friday’s weak US economic indicators pushed down US dollar index and allowed metals prices to rebound. US March durable goods orders increased 4% on the month, higher than the expected 0.6%. However, March durable goods orders, excluding transports and nondefense capital goods excluding aircraft were downbeat, pointing to US investors’ weak confidence. Then Deutsche Bank dropped US Q1 GDP expectation to 0.7% from 1.7%, weighing down US dollar index.

China’s Deputy Director of Investment Department of the National Development & Reform Commission reported to start new major projects recently, supporting metals. China’s first state-owned enterprise default turned better with the help of People’s Bank of China.

European and American stocks all increased. But US dollar and crude oil prices dropped. LME base metals prices all climbed.

SHFE zinc is expected to trade at RMB 16,700-16,800/mt on April 27, and spot zinc may be offered at discounts of RMB 100-120/mt.