Zinc led the SHFE base metals complex lower during the early trading session on Friday, with sister-metal lead experiencing a similar degree of weakness. Tin was the most resilient of the complex, and was the only metal to secure any gains this morning.
The most-traded September zinc contract on the SHFE traded at 20,775 yuan ($3,112) per tonne as at 10.35am Shanghai time, falling 195 yuan per tonne or 1% from Thursday’s close.
While most of the complex was under pressure from heightened trade tensions between the US and China, zinc prices were under additional pressure from rising stocks on the London Metal Exchange.
LME zinc stocks totaled 245,650 tonnes on Thursday, up from 181,325 tonnes on April 23.
“A total of 198,025 tonnes has been delivered into the LME so far in 2018, which has gone a long way to displace the 263,000-tonne deficit currently forecast by the International Lead & Zinc Study Group (ILZSG),” Metal Bulletin analyst James Moore said.
The main catalyst behind the weakness in the base metals this morning, according to market participants, remains the strained trade relations between the US and China, which has seen a number of tit-for-tat actions between the world’s two largest economies in recent weeks.
“Confidence is weak due to the ongoing trade tariff wars between America and anyone that President Trump feels is taking advantage of America,” Malcolm Freeman, chief executive officer of Kingdom Futures, noted on Friday.
Yet the weakness has been fairly limited in contrast with the sell-off witnessed on Thursday, with a lack of an immediate response from China to the latest US tariffs providing some relief to the market.
“Markets took a breather overnight, with China holding off immediate retaliation in light of the latest US tariff threats,” ANZ Research said.
Prices were further pressured by a firmer dollar of late; the dollar index stood at 94.84 as at 10.30am Shanghai time, the recent low being 93.71 on Monday.
Other metals down, bar tin
Currency moves and data releases