SMM Zinc Market Morning Review (2015-6-11)

SHANGHAI, Jun. 11 (SMM) – LME zinc prices opened at USD 2,164.5/mt and surged to USD 2,191/mt. But weak market fundamentals, combined with mounting selling pressure allowed LME zinc prices to rolled back early day gains and dipped to USD 2,137.5/mt, and closed at USD 2,146.5/mt, down USD 16.5/mt or 0.76%. Trading volumes decreased 2,161 to 97,987 lots, and total positions grew 2,842 to over 310,000. LME zinc inventories grew 9,000 to over 4530,000 mt.

SHFE 1508 zinc contract prices opened at RMB 16,430/mt Wednesday evening, then plummeted to RMB 16,255/mt with falling LME zinc prices, and closed at RMB 16,275/mt, down RMB 150/mt or 0.61%. Trading volumes decreased 2,248 to 46,750 lots, and total positions increased 4,274 to 125,500.

The JPY:USD surged on Bank of Japan president’s statement. Base metals prices were boosted but diverged later on.

The NDRC approved a series of infrastructure construction projects worth over RMB 120 billion yesterday. But a report from the PBOC lowered its forecast of China’s 2015 growth to 7.0%, and that for CPI was lowered to CPI, with the proportion of current account surplus in GDP up 2.9%.

The World Bank raised its expectation of eurozone 2015 growth by 0.4 percentage point to 1.5%, and prompted the Fed to delay interest rate hike until next year, citing imbalance in US economic recovery. But Goldman Sachs predicts the Fed will hike interest rate in September.

Crude oil prices continued to rise as US crude oil inventories fell more significantly than expected, and hitting a new high for the year. New York gold prices closed up 0.8% at USD 1186.60/oz. US stocks closed with gains, with the Dow Jones Industrial Average up most significantly over the past month.

LME zinc prices are expected to fall to USD 2,130-2,160/mt today. SHFE 1508 zinc contract prices will drop to RMB 16,200-16,300/mt, with spot prices ranging from RMB 10/mt below to RMB 20/mt above SHFE 1508 zinc contract prices.