LME Zinc Fell Further Despite a Slight Rebound

SHANGHAI, Apr 7 (SMM) - The Federal Reserve's balance sheet has experienced volatile ups and downs this week, ranging between $73.56 billion and $8.63 trillion, and has seen the largest weekly decline since July 2020. Over the past week, the fund in currency market hit record highs, though the inflows have slowed down. About $49.1 billion funds flowed into the US monetary market in the week ended April 5, ICI data showed, compared with the $54.5 billion last reported. The total assets in the monetary market has now reached $5.25 trillion.

St. Louis Fed President Bullard priced at 85% possibility of financial pressure continuing to ease. The US initial jobless claims in the week ended April 1 recorded 228,000, the highest since the week ended December 3, 2022. Caixin China's service industry PMI in March posted 57.8, a new high in 28 months. It also suggests that China’s service industry has been in the expansion range for three consecutive months. According to China’s State Administration of Taxation, the real estate sales during January and February reversed the previous downward trend and witnessed an increase of 2.3% year-on-year. The year-on-year increase in March is 17.9%. It is estimated that another 1.2 trillion yuan will be cut in taxes and fees this year.

LME zinc opened at $2,808/mt overnight, touching a low of $2,775.5/mt, and then rebounded to close at $2,804/mt, a loss of $3/mt or 0.11%. Transaction volume rose to 7,778 lots, and open interest added by 2,588 lots to 175,000 lots.  LME zinc inventory remained flat. LME zinc prices posted a 6-day losing streak.

Overnight, the most-traded SHFE 2305 zinc contract opened at 22,045 yuan/mt and closed at 22,090 yuan/mt, down 10 yuan/mt or 0.05%. Trading volume was reduced to 47,573 lots, and open interest gained by 2,569 lots to 106,000 lots. 

The worries about economic recession brought about by US employment data still put pressure on zinc prices. The growth rate of China’s real estate sales from January to February saw an increase of 2.3% year-on-year, followed by a year-on-year increase of 17.9% in March. The peak consumption season can still bolster zinc prices. However, SMM data shows that domestic refined zinc output in March was 556,800 mt and is expected to remain high in April. As such, traders should be wary of risks on the supply side.