SMM Zinc Market Morning Review (2015-4-10)

SHANGHAI, Apr. 10 (SMM) – The US dollar index rebounded yesterday, but LME zinc prices were strong compared to other base metals prices. Global zinc tightness, combined with improving economies in Europe and US, boosted market sentiment. LME zinc prices rose for the fifth straight day, rising to USD 2,180/mt and closed at USD 2,177/mt, up USD 20/mt or 0.93%. Trading volumes were up 1,216 to 11,807 lots, and total positions increased 3,151 to 300,000. LME zinc inventories were down 50 mt to 509,925 mt.

SHFE 1506 zinc contract prices opened at RMB 16,215/mt Thursday evening, and lacked ability to rise and met resistance at RMB 16,300/mt, and closed the day at RMB 16,250/mt, up RMB 80/mt or 0.49%. Trading volumes were up 22,454 to 58,638 lots, and total positions increased 2,234 to 126,622.

The number of US initial jobless claims last week was 281,000, better than expected, with the average for the last four weeks hitting a record low since 2000. This undermined negative effects from US non-farm employment in March. The US dollar index surged 0.9% to break through 99, weighing down base metals prices.

Greek Finance Minister said Greece has paid off debt to the IMF, and IMF Chairman confirmed they have received the payment, helping ease market concerns over Greek crisis. It was reported that European Central Bank hiked Emergency Liquidity Assistance for Greek banking sector by EUR 1.2 billion, higher than the EUR 800-900 million required by Greece. This helped ease Greek tensions. But the strong US dollar index weighed on the euro to fall 1.12%, depressing investors.

China further loosened restrictions on the property market, which positively affects base metals prices.

Iran’s nuclear issue has yet to be resolved, meaning the country’s crude oil exports will be restricted, which is favorable for crude oil prices in the near term.

The US dollar index rose 0.95%, while the EUR:USD dropped 1.13%. European and US stocks mostly increased. LME base metals prices followed their own trends, with LME lead and zinc prices rising.

China’s March PPI and CPI slated for release today are not promising, which will dampen market sentiment. LME zinc prices are expected to move between USD 2,155-2,185/mt today. SHFE 1506 zinc contract prices will fluctuate between RMB 16,200-16,300/mt, with spot discounts of RMB 120-100/mt against SHFE 1506 zinc contract prices.