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The most-traded SHFE June zinc contract was at 23,295 yuan ($3,664) per tonne as at 10.47 am Shanghai time, down by 435 yuan per tonne from the previous day’s closing price. Around 316,000 lots of the contract have been traded so far.
The LME three-month zinc price dropped below $3,000 per tonne and dived to its lowest point since August 2017 on Thursday. The price closed at $3,007 per tonne, down 1.3% from Wednesday’s close.
The price dip may be a delayed response to the delivery of more than 60,000 tonnes into Antwerp’s LME-listed warehouse last week, though trader sentiment point toward an eventual outflow of the material.
“The SHFE zinc price is facing strong technical resistance…the price is expected to remain weak in the near-term,” China’s Ruida Futures said in report late on Thursday.
The broker added that SHFE base metal prices should continue to face downward pressure from a strong dollar, a result of positive US economic data.
The dollar index had hit as high as 92.84 on Wednesday, the highest since December 27, 2017. The index was at 92.38 at 10.43 am Shanghai time after consolidation set in.
In zinc news, Teck Resources has signed annual zinc concentrate supply deals with European smelters Glencore and Nyrstar with treatment charges (TCs) at $147 per tonne. The deals mark a 12-year low in headline TCs – the fees paid to smelters for the processing of concentrate into refined metal – and a 14.5% drop from last year’s level of $172 per tonne, initially settled between Teck and Korea Zinc amid a tight spot concentrate market.
Meanwhile, China’s April Caixin Services purchasing managers’ index (PMI) came in a 52.9 on Friday, higher than the expected 52.2.
April survey data pointed to stronger increases in output across both the manufacturing and service sectors. Growth of services activity improved to a solid pace, although remained slower than that seen at the start of 2018, according to a joint statement from Caixin Insight Group and IHS Markit on Friday.
Investors will eye the US official jobs report due later today for indications of labor market and economic strength in the country – some 190,000 jobs are expected to have been added in the United States in April.
Trade is also expected to remain in focus with talks under way between senior US and Chinese officials in Beijing, though some market watchers noted that any breakthrough in the tariff standoff between the two economies was unlikely.
The US had threatened to impose import tariffs of 25% on a list of 1,300 items produced by China – among them aluminium and aluminium products, while China has threatened a 25% import tax on $50 billion worth of US-origin products including soy beans, automotives, chemicals and airplanes.
Base metals prices
Currency moves and data releases