(MB) Base metals prices on the Shanghai Futures Exchange were largely down during morning trading on Monday March 4, with zinc leading the pack lower. Aluminium managed to buck the downward trend but gains for the light metal were marginal. The weak performance by the base metals follows a raft of soft economic data releases from the United States at the end of last week which dented market sentiment. “US data releases on Friday night were unequivocally soft. The all-important ISM manufacturing [purchasing managers’ index (PMI)] fell to a 2-year low, coming in 54.2 from 56.6 and against expectations of a smaller decline to 55.8,” Rodrigo Catril, currency strategist at National Australia Bank, said in a morning note. “Details on the survey were not that impressive either; production fell to 54.8 from 60.5, new orders came at 55.5 from 58.2 and employment at 52.3 from 55.5,” Catril added. The University of Michigan’s (UoM) index of consumer sentiment was similarly disappointing, dropping to 93.8 in February, up from 91.2 in January but below the previous estimate of 95.5.
As a result, most of the base metals prices on the SHFE were down this morning, with zinc falling the most. The most-traded zinc contract on the SHFE stood at 22,075 yuan ($3,290) per tonne as at 10.30am Shanghai time, down by 225 yuan per tonne or 1% from last Friday’s close of 22,300 yuan per tonne.
While zinc prices on the London Metal Exchange continue to find support from record low volumes of the metal contained in the exchange’s warehouses, stocks on the SHFE have risen significantly since the end of last year; SHFE zinc stocks totaled 113,175 tonnes on March 1, an increase of 93,072 tonnes from 20,103 tonnes on December 28, 2018.
Furthermore, zinc stocks in the Shanghai-bonded zone recorded another steady month-on-month increase in February on the expectation of an uptick in domestic demand.
Shanghai-bonded zinc stocks totaled 79,000-86,000 tonnes last month, up 5% from January’s 75,000-82,000 tonnes, according to Fastmarkets’ latest assessment.
