33% Chinese Investors Bearish toward Zinc This Week, SMM Survey

SHANGHAI, Dec. 29 (SMM) –SMM survey of over 30 industry insiders finds that 54% are neutral and expect LME zinc to move between USD 1,535-1,585/mt this week, and SHFE 1602 zinc to fluctuate between RMB 12,900-13,300/mt. The US dollar index will fall as interest rate hike by the Fed has been absorbed by the market. Other commodity futures prices also rose, with prices for coking coal and iron ore stabilizing. Trading volumes continued to shrink. SHFE 1603 zinc saw a large number of longs entering the market, but met resistance at the 60-day moving average due to selloffs. Investors are expected to leave the market ahead of the New Year holiday.

See SMM Price Forecast Please Click:LME Zinc to Rise Next Week, SMM Says

33% are bearish, expecting LME zinc to fall to USD 1,520/mt and SHFE 1602 to drop to RMB 12,800/mt. Downstream buyers will refrain from buying as zinc prices rebounded, and some bearish ones will also stay on the sidelines. Year-end liquidity crunch will deter some downstream buyers from building stocks. There are still large amount of goods releases with VAT invoices, widening spot discounts.

Some 13% are bullish, seeing LME zinc rebound to USD 1,600/mt, and SHFE 1602 rise to RMB 13,500/mt. Crude oil prices rebounded slightly last week due to falling inventories, boosting market sentiment. Besides, additional stimulus measures are expected from China, helping ease liquidity tightness. TCs of imported zinc (50%) fell to USD 150-170/dmt, down USD 20/dmt, depressing zinc smelters. Market is thus expecting additional output cuts at Chinese zinc smelters. China’s zinc output fell 2.44% YoY in November, and output also slid in December as an increasing number of smelters undertook maintenance. This should lend support to zinc prices.