Steel Products Prices North America

CRU Analysis of Short-Term Zinc Market

August 19, 2018

CRU zinc analyst Helen O’Cleary reported late last week on what was causing the short-term movement of zinc pricing:

CRU “Zinc’s price has been pressured lower again in recent days on a combination of risk-averse investor sentiment, U.S. dollar strength and a sizeable delivery of warrants into the LME’s New Orleans warehouses. It breached support at $2,430/t in early trading on Aug. 15 to rack up losses of $360/t in just four days, although it has recovered to the mid-$2,300s at the time of this writing. Zinc’s price on the ShFE has proved more resilient: although it continued its downward trend on Aug. 16, its losses were limited to rmb1,620/t ($240/t) Aug. 10-16.

“Meanwhile the euro has succumbed to weakness on the back of the slump in the value of the Turkish lira, over concerns that European banks may be exposed to bad loans if the situation in Turkey deteriorates further, although the recent intervention by Qatar to support the lira and limits on shorting it have halted its slide for now. The doubling of U.S. import tariffs on exports of aluminum (from 10% to 20%) and steel products (from 25% to 50%) from Turkey is the latest scuffle in what Turkey has called the “economic war” being waged against it by the USA. Escalating trade tensions continue to dominate China-USA relations, too, with China’s proposal to apply or increase import tariffs on a further $60 billion of U.S.-made goods, including zinc products.

“Concerns over the extent of the slowdown in China are also adding to bearish sentiment in the markets, despite the government’s pledge to increase spending in an attempt to mitigate the drag of trade tariffs.”