SHANGHAI, May 7 - Zinc futures prices on the Shanghai Futures Exchange (SHFE) may slide in the short term on falling demand and increasing supply, an analyst said on May 6th.
"Zinc prices have rebounded too rapidly recently - the global zinc market expected to be in surplus this year. With the traditional slack consumption season from May to August, it is likely that SHFE zinc prices will drop in the near future, Chen Xiaodong, an analyst from Guang Sheng Futures, said.
Chen added that the Chinese government has started implementing stricter controls on bank loans recently, which means there will be less cash flowing into commodity markets and commodity prices may be pulled down.
Furthermore, increasing market supply will have a negative impact on SHFE zinc prices in the near future. Since late March, domestic zinc output has started to increase due to rebounding zinc prices, which encouraged most zinc smelters and miners to restart operations at previously idle facilities, Sun Fan, an analyst from CITIC Futures, said.
Analyst Zhao Kai from Jinrui Futures predicted that domestic zinc pricesmay fall to RMB 11,000/mt (USD 1,612.15) before late August.
The most-traded 2009 August zinc contract on the SHFE ended at RMB 13,090/mt (USD 1,918.45) on May 6, up 1.36 percent from the previous trading day.
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