Interfax-China reported that Zinc futures prices on the Shanghai Futures Exchange may slide in the short term on falling demand and increasing supply.

Mr Chen Xiaodong an analyst from Guang Sheng Futures said "Zinc prices have rebounded too rapidly recently the global zinc market expected to be in surplus this year. With the traditional slack consumption season from May to August, it is likely that SHFE zinc prices will drop in the near future. He said that the Chinese government has started implementing stricter controls on bank loans recently, which means there will be less cash flowing into commodity markets and commodity prices may be pulled down.”

Mr Sun Fan an analyst from CITIC Futures said furthermore, increasing market supply will have a negative impact on SHFE zinc prices in the near future. Since late March, domestic zinc output has started to increase due to rebounding zinc prices, which encouraged most zinc smelters and miners to restart operations at previously idle facilities.

Analyst Mr Zhao Kai from Jinrui Futures predicted that domestic zinc prices may fall to CNY 11,000 per tonne before late August.

The most-traded 2009 August zinc contract on the SHFE ended at CNY 13,090 per tonne on May 6th up 1.36% from the previous trading day.

(Sourced from Interfax-China)