Import losses will widen if the yuan continues to weaken against a strong US dollar. The yuan has declined since the middle of April as US-Sino trade tension grew. As of June 21, the yuan stood at 6.47 against the US dollar.
LME zinc broke support at $3,000/mt on June 21, and this is likely to further lower prices of SHFE zinc in the short term. Meanwhile, fundamentals in the domestic zinc market weakened as intensified environmental probes depressed consumption in the low season.
We also believes that potential arrivals of imported zinc in the following days are likely to be directed to bonded areas given the current glut.