Markets Bet on US Fed Rate Hikes, LME Zinc Comes Under Pressure [SMM Morning Meeting Summary]

SMM News, March 20:

Futures: Overnight, LME zinc opened at $3,132.5/mt. In early trading, LME zinc briefly rose to a high of $3,136/mt, after which bears added to open interest and LME zinc fluctuated downward all the way, hitting a low of $3,125/mt during the night session. The center then rebounded, and it finally closed down at $3,073.5/mt, down $59/mt, or 1.88%. Trading volume increased to 18,995 lots, and open interest rose by 607 lots to 209,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened lower with a gap at 22,350 yuan/mt, which was also the intraday low. Bulls then added to open interest, and SHFE zinc fluctuated upward throughout the session, touching a high of 22,940 yuan/mt near the close. It finally closed up at 22,860 yuan/mt, up 155 yuan/mt, or 0.68%. Trading volume fell to 93,582 lots, and open interest increased by 852 lots to 105,000 lots.
Macro:
The market began to bet that the US Fed would raise interest rates; Trump said he had no knowledge whatsoever of Israel's attack on Iran's South Pars natural gas field; US Treasury Secretary Bessent said sanctions on Iran's seaborne oil might be lifted in the coming days and that Iranian oil would be used to push for lower prices; Iran said retaliatory actions over attacks on its energy infrastructure were not yet over; a joint statement by six countries said they were prepared to take measures to safeguard the security of the Strait of Hormuz; the US defense secretary confirmed that he had requested White House approval for a $200 billion appropriation application; the Ministry of Finance said securities transaction stamp tax totaled 49.9 billion yuan in January-February 2026, up 1.1 times YoY; the central bank said it would resolutely maintain the stable operation of financial markets including stocks, bonds, and foreign exchange; airlines in China collectively raised fuel surcharges, with the maximum increase doubling.
Spot Market:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.42, and shipment sentiment was 2.73. Zinc prices on futures continued to decline MoM. Downstream enterprises continued to price purchases on dips, but some enterprises had already made purchases earlier, and new purchases yesterday were limited. Overall transactions were weaker than the previous day. Traders continued to raise spot quotations, and spot discounts in the market narrowed accordingly.
Guangdong: Refined zinc purchase sentiment in Guangdong was 2.51, and sales sentiment was 2.63. Yesterday, the center of zinc prices continued to move lower, while downstream restocking on dips persisted, with enterprises making more priced purchases. Traders' shipments improved, and more active trading drove spot premiums to continue rising.
Tianjin: Refined zinc purchase sentiment in Tianjin was 2.45, and shipment sentiment was 2.73. Yesterday, zinc prices continued to fall below key levels, and downstream priced purchases on dips increased, while actual transactions were average. Market trading among traders was active, traders' shipment premiums rose slightly, and overall market transactions improved from the previous day.
Ningbo: Zinc prices on futures fell below 23,000 yuan/mt. Yesterday, traders continued to raise spot quotations. Although some enterprises made priced purchases on dips, overall purchase willingness was weaker than the previous day, and market wait-and-see sentiment persisted.
Social Inventory: On March 19, LME zinc inventory fell by 175 mt to 117,850 mt, a decrease of 0.15%; according to SMM communication, as of March 19, inventory in China decreased.
Zinc Price Forecast: Overnight, LME zinc posted a bearish candlestick with a long lower shadow. The market began pricing in a US Fed rate hike, the US dollar stayed strong, and base metals remained under pressure, with LME zinc moving lower under pressure. It was expected to trade mainly in a range today. Overnight, SHFE zinc posted a bullish candlestick with no lower shadow. Macro sentiment remained weak, and the Middle East situation eased slightly. In China, after zinc prices broke lower and consumption gradually recovered, destocking materialized, providing some support to fundamentals. SHFE zinc was expected to trade mainly in a range today.

Data Source Statement: Except for public information, all other data were processed and derived by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do not constitute decision-making advice.