Chinese zinc smelters have been cutting sales and production, leading to sustained draws in Shanghai Futures Exchange inventories, says Barclays Capital. Combined with financing demand, SHFE prices are holding at a premium over the London Metal Exchange, they note. However, the firm says a non-Chinese supply response is what’s needed to offer real and sustained downside support to prices. In their view, current market trends are not enough to support a recovery in zinc prices at the moment, for that there has to be a corresponding recovery in demand. We expect that to develop later in the year as global growth momentum improves they reported.
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