Note from SP Angel out of London last night: Zinc US$ 2,659/t vs...

Note from SP Angel out of London last night:

Zinc US$ 2,659/t vs US$2,586/t yesterday

• Chinese spreads are allowing Citi to raise near-term zinc forecasts, with the base case for “tightness in China is likely to spread to ex-China once the Chinese market is back from holiday, and once LME Week begins next week”. The bank have raised their three-month target to $2,800/t from $2,600/t, while Q4 forecast increased to $2,650/t from $2,500/t. citing “screaming bullish” spreads.
• Chinese spreads near most backwardated level in a decade-long time series, which is historically a strong buy signal, with SHFE front month to three-month spread at 6%.
• Massive near-dated backwardation likely driven by a combination of Chinese smelter output cuts, consumer stocking, bank says. LME zinc rose more than +2%, regaining some of the -20% losses YTD.