SMM Zinc Market Morning Review (2015-5-22)

SHANGHAI, May 22 (SMM) – HSBC’s PMI for China released yesterday hit a 2-month high, but falling short of market expectations. Commodity market was plagued with market caution. LME zinc prices opened at USD 2,207/mt, then plunged and dipped to USD 2,182/mt, but clawed back some losses, and closing at USD 2,206/mt, up USD 2/mt or 0.09%. Trading volumes decreased 689 to 12,877 lots, and total positions fell 5,487 to over 320,000. LME zinc inventories fell 2,175 to 464,950 mt.

SHFE 1507 zinc contract prices opened at RMB 16,540/mt Thursday evening, then reached RMB 16,685/mt, but dropped back to RMB 16,600/mt later on and closed at RMB 16,585/mt, up RMB 5/mt or 0.03%. Total positions fell to their lowest over the past month.

The number of US initial jobless claims last week increased 10,000. March home sales, the Philadelphia Fed's and Kansas City Fed’s manufacturing indexes were both worse than expected, weighing on the US dollar index. However, US stocks remained firm.

French manufacturing data were upbeat, while Germany’s manufacturing index fell short of market expectations. Eurozone May manufacturing PMI was 52.3, hitting a 13-month high, but service PMI was sluggish. Nonetheless, European Central Bank announced it will accelerate Quantitative Easing soon.

American Automobile Association (AAA) expects the number of people driving over 50 miles during May 21-25 should increase 5.3% to 33 million, which will help ease crude oil oversupply. This allowed COMEX crude oil prices to rise 3%.

HSBC’s May PMI for China was 49.1, its highest over the past two months. The NDRC approved RMB 458.768 billion in investment in the past three days, meaning China is making effort to stabilize economy.

Global stocks markets mostly rose; LME base metals prices were mixed.

LME zinc prices are expected to move between USD 2,180-2,220/mt today. SHFE 1507 zinc contract prices will fluctuate between RMB 16,550-16,650/mt, with spot discounts of RMB 90-70/mt against SHFE 1507 zinc contract prices.