(MB) Base metals traded on the Shanghai Futures Exchange were split into two camps during Asian morning trading on Tuesday March 6, with zinc, lead and tin prices weakening, while the rest pushed higher. Zinc prices led the decline on the back of the weakness seen on the London Metal Exchange on Monday, following a surge of the material entering LME warehouses in the US port of New Orleans. The most-traded May zinc contract on the SHFE decreased to 25,325 yuan ($3,993) per tonne as of 10.00am Shanghai time, down by 325 yuan or 1.3% from the previous day’s close of 25,650 yuan per tonne. Some 78,950 tonnes were delivered into LME-approved warehouses in New Orleans on Monday – the largest inflow since July 2013, increasing on-warrant stock levels by 94%. And it is not just the LME which has seen a significant increase in stock levels in recent days; SHFE zinc stocks climbed 31% or 35,664 tonnes last week to reach 150,551 tonnes as of March 2 amid reduced demand from galvanizers due to environmental restrictions. The three-month zinc price on the LME fell to a two-month low of $3,273.50 per tonne during trading on Monday and was still $59 lower at $3,296 at the 5pm London close. “[The surges in stock levels] have elevated market participants’ concerns about how much hidden inventory there is in the market, especially after the supply tightness seen in 2017,” a Shenzhen-based trader told Metal Bulletin. “Many market participants are now going short in the zinc market and today in the domestic spot market, some stockholders have lowered their prices sell off more stock,” the trader added. Prices for zinc’s sister metal lead were also weaker during morning trade on Tuesday. The SHFE April lead contract price dropped by 210 yuan or 1.1% to 18,540 yuan per tonne.
