LME Zinc price may advance to near $2,100 a ton mark next week

LME zinc prices are expected to point toward $ 2,100 next week, moving between $ 2,050-2,120 per ton, SMM zinc analyst predicts.

"Zinc prices appear to be more resistant to declines among other base metals, and investor confidence will improve after some mines lowered domestic zinc concentrate TCs due to tight supply in South China”, SMM zinc analyst explains. A technical indicator also shows significant support to LME zinc price.

But a strong US dollar will constrain some price gains, SMM added.

In China, September-delivery zinc contracts on the SHFE will consolidate support from the 5-day moving average, fluctuating in the 15,500-16,000 yuan per ton range. SHFE zinc price will underperform LME zinc with the lack of market confidence from soft domestic demand.

Spot price in Shanghai will trade 0-60 yuan per ton below SHFE zinc contracts for September delivery.

Supply grew recently as smelters increased sales with rising zinc price. A narrowing price gap between Shanghai and Tianjin will also drive more shipments to Shanghai. Purchases will be sluggish, though. 

Traders will be reticent toward goods releases after delivery, and downstream buying interest will be also weak, allowing spot discounts to expand.