LME zinc: At the beginning of last week, expectations of interest rate decisions of the US Federal Reserve and the European Central Bank weakened risk appetite, keeping LME zinc prices rangebound. The annualised US CPI in May before seasonal adjustment was 4%, lower than expected, and the annualised core CPI was 5.3%, in line with expectations. The market bet 100% odds that the Fed would pause interest rate hikes in June. This drove bulls into the market and LME zinc prices climbed. In the second half of the week, the annualised US PPI in May hit a new low since December 2020 and recorded 1.1%. The Fed suspended its rate hike in June. US retail sales in May exceeded expectations and came in at 0.3%, but the European Central Bank raised interest rates by 25 basis points, pushing down the US dollar index. LME zinc prices thus strengthened and closed at $2,494.5/mt last Friday, with a weekly gain of $122/mt or 5.14%.
SHFE zinc: At the beginning of last week, the market had some concerns about the poor performance of zinc downstream consumption. On the other hand, market sentiment picked up. In this scenario, SHFE zinc prices moved rangebound. The contract then followed LME zinc prices up after the Fed’s interest rate decision. A barrage of policy support such as favourable new energy vehicle policies, deposit rates cuts in a bid to release liquidity and favourable real estate policies issued by local governments drove SHFE zinc prices to rise. However, the inflows of imported zinc driven by the reopening of the import window excluding tax impacted domestic supply. SHFE zinc prices levelled off and moved rangebound.
As of 15:00 CST last Friday, SHFE zinc prices closed up 595 yuan/mt or 2.98% at 20,560 yuan/mt.
