Continuing its price decline, the three-month zinc futures contract moved away from the $2,400-per-tonne resistance level, hitting an intra-morning low of $2,363 per tonne.
The galvanizing metal’s price movement had kept between the $2,400-2,500-per-tonne level over June, while its benchmark cash/three-month spread remained in a wide backwardation of over $100 per tonne.
The spread has continued to ease over July, flipping into a cash/three-month contango recently seen at $3 per tonne. Similarly, near-term business is also less costly in zinc, with the nearby cash/July spread recently seen in a $1.71-per-tonne contango.
“This morning has started on a negative note with the metals losing ground again as the Chinese equity markets continue to drift as a trade deal seems to be drifting away and many are now questioning whether or not the Federal Open Markets Committee (FOMC) will actually cut rates tomorrow,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.
“With no key economic data due today the metals look set to drift with the only possibility of surprises most likely to come from the LME stocks,” he added.
Elsewhere in the complex, three-month copper futures were trading below the $5,900-per-tonne level once again this morning, failing to break above the nearby resistance level after closing at $5,892 per tonne on Monday.
Volumes traded in the red metal have gathered pace over the morning, with more than 7,100 lots exchanged as of 9:50am London time.
Copper’s forward spreads also remain supportive of business, with the cash/three-month spread recently seen in a contango of $17.95 per tonne, while the nearby cash/July spread recently traded in a contango of $6.50 per tonne.
In copper’s physical market, major miner Antofagasta has broken away from decades-long tradition to sign copper concentrates supply contracts for the first half of 2020
with China’s two biggest copper smelters Tongling and Jiangxi copper at the mid-$60s per tonne/6s cents per lb, Fastmarkets understands.
- The US dollar index was higher over the morning, up 0.19% at 97.55.
- In other commodities, Brent crude oil futures were 0.74% higher at $64.34 per barrel.
- The zinc-lead price differential, or switch, recently traded at $472 per tonne. The switch breached $1,000 per tonne in April amid zinc’s three-month price climb beyond $2,900 per tonne.
- In data today, Federal Reserve Chair Jerome Powell is speaking and Canadian Consumer Price Index numbers are due out.