The long and short factors intertwined Shanghai zinc sideways shock

On the eve of the release of the November CPI data, the central bank announced the raising of the reserve requirement ratio again. The rate hike is still not being realized, and the market is concerned that the recent rate hike by the central bank has slowed. The overall non-ferrous metals in the outer disk are still at a high level, and in particular, the history of Lun Copper has reached a record high. The domestic short-selling and foreign non-ferrous metals have brought effective support to Shanghai Zinc. Shanghai Zinc once broke through the 18,000 yuan/t platform and rushed to 19,000 yuan/t. However, the US dollar index has recently retreated from the downward trend to 80, suppressing commodity prices, and the domestic year-end close to the market as a whole tends to fade, and the market is worried that the central bank will once again raise the deposit reserve ratio or raise interest rates. In the near future, it is still dominated by sideways shocks. The dollar’s ​​turn may inhibit the rising trend of commodities. Global commodities have maintained a strong upward trend and reached new heights in recent months. Products such as cotton, sugar, copper, gold, and rubber are both stimulated by the imbalance of supply and demand. But what is even more important is that the US dollar index continues to decline, resulting in a strong rise in dollar-denominated commodities and inflation expectations to stimulate funds to actively buy commodities. After the Fed launched EQ1 and EQ2, the market was even more worried that as the US economy is still sluggish, EQ3 continues to be launched to stimulate the economy. However, the Fed announced on Tuesday that it would maintain its interest rate unchanged at near-zero level and maintain its purchase of a $600 billion long-term U.S. government bond financial stimulus program that did not exceed market expectations and that the market turned to the European debt crisis.

Recently, the European debt crisis has repeatedly followed the warning. Moody's Investors Service said on Wednesday that it may downgrade the rating of Spanish government bonds. The Standard & Poor's rating agency lowered the Belgian debt outlook rating from "stable" to "negative." It further exacerbated the market’s worries about the eurozone’s fiscal crisis and pushed up the demand for the US dollar as a safe haven asset. At the same time, the recent US economic data is optimistic support for the US dollar. Both the euro’s lower stimulus and the short-term economic data’s optimism and stimulus are not surprising. Market speculation that the Fed’s EQ3 monetary policy is expected to fail, and the recurrence of the European debt issue will bring positive for the US dollar. Therefore, the recent strength of the USD’s turning trend may restrain the rising trend of commodities, and the upward trend of Lun Zinc and Shanghai zinc is unavoidably blocked. Monetary policy tightening pressure has not yet been released Containing Shanghai zinc China's November CPI hit a 28-month high, credit data continued to rise, and the trade surplus was running high. On December 10, the central bank again raised the reserve requirement ratio of major banking institutions to a high of 18.5%. It has become increasingly evident that the monetary policy has changed from being loose to tight in the past two months. Although prices are still at a high level as a whole, although there is a spur to the rise in global commodity prices, they are also inseparable from domestic easing monetary policy factors.

At present, the domestic price level is still at a relatively high level, and the state has not slowed down the pace of adjusting prices. Inflationary pressures will continue to exist in 2011. Under the general background of “normal monetary policy”, the central bank may still raise interest rates during the year. Survey data in recent days show that residents’ satisfaction with price levels has hit a new low in 11 years. This shows that, to some extent, there is still a certain gap between the current price level and the residents’ affordability. In view of the complicated internal and external economic situation, the central bank has not yet taken measures to raise interest rates to collect and withdraw currencies, and the interest rate hike has not yet landed. Under the background that the tightening pressure on monetary policy has not yet been effectively released, market funds are still in a wait-and-see period. It is difficult for the commodity market to actively launch a rally in the short term. The conditions for the Shanghai zinc price increase are still immature. The zinc callback pressure increases Shanghai zinc consumption gradually fades The recent rise in the historical high of London copper, followed by profit-taking and dollar strength showed a downward trend. The price of zinc concentrate has not been effectively followed up. For smelters, the current profit margin for processing fees can be locked at 8,000 yuan. The profit margin is still relatively large, and the supply expectation in the latter period is sufficient. According to data released by the World Bureau of Metal Statistics (WBMS) on the 15th, from January to October this year, the global zinc market has an oversupply of 360,000 tons. In the same period of 2009, the market had a surplus of 123,000 tons. The recent sharp increase in London Zinc and Shanghai zinc stocks again shows that the fundamentals are still weak, and the zinc ingot market is still in a weak state.

Due to the recent blizzard, high-speed closure of the Inner Mongolia region has affected the transportation of zinc ingots in the region, and the market supply has become tight in the short term. However, after all, it is currently in the off-season of corporate procurement and faces financial pressure. Short-term traffic factors have little effect on zinc price stimuli. The overall turnover of the domestic zinc spot market was sluggish. The downstream companies received less goods, and the smelter also reduced shipments. Therefore, under the pressure of the zinc callback, Shanghai zinc consumption gradually weakened under pressure, Shanghai zinc shocks may continue.

In summary, the recent market hotspots have shifted from weak US dollar to weaker US dollar, which has stimulated stronger US dollar. The domestic commodity market has been suppressed due to long-term capital tightening by the country’s monetary policy, and the expected hike in interest rates has not yet been honoured. Under the background that the spot zinc consumption is easing and the supply is loose, the above factors have negatively affected Shanghai zinc in the short term. However, the continuous decline of the US dollar index will be the trend, and the overall external metal remains strong. Once the domestic interest rate hike expectations are fulfilled, commodities will rebound effectively. Therefore, in the intertwined background of long and short factors, Shanghai zinc fear will continue the pattern of sideways shocks.