LME Destocking Still Provides Support, LME Zinc Center Moves Higher [SMM Morning Meeting Minutes]

SMM February 12:

Futures: Overnight, LME zinc opened at $3,392/mt. At the beginning of the session, bulls and bears intertwined, and LME zinc briefly pulled back to explore a low of $3,368.5/mt. Subsequently, bulls increased their positions, and LME zinc fluctuated upward, touching a high of $3,458.5/mt during the night session. However, upward momentum was insufficient afterward, and the price center pulled back, finally closing up at $3,418/mt, an increase of $20/mt or 0.59%. Trading volume increased to 10,803 lots, and open interest increased by 4,800 lots to 235,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,780 yuan/mt. Initially, SHFE zinc briefly rose to touch a high of 24,800 yuan/mt, but then bears increased their positions, leading SHFE zinc to fluctuate downward. It explored a low of 24,510 yuan/mt towards the end of the session, finally closing down at 24,535 yuan/mt, a decrease of 105 yuan/mt or 0.43%. Trading volume decreased to 26,540 lots, while open interest increased by 2,781 lots to 81,650 lots.

Macro: US non-farm payrolls added 130,000 in January, and the unemployment rate fell to 4.3%; The US Fed's Milan expressed willingness to remain at the Fed; Trump said reaching a deal with Iran would be the "preferred choice"; The Central Bank of Kenya joined African gold accumulation; Serbia's gold reserves hit a record high; Indonesia plans to cut production at the world's largest nickel mine by 70%; Wingtech responded to the latest ruling by the Dutch Enterprise Court on the Nexperia case; Li Qiang: Comprehensively promote AI technological innovation, industrial development, and enabling applications.

Spot Market:

Shanghai: Yesterday, the purchasing sentiment for refined zinc in the Shanghai area was 1.78, and the selling sentiment was 2.06. Recently, the market atmosphere has been dominated by holiday closures. Yesterday, few traders provided quotes in the Shanghai market, with some continuing to raise spot offers. However, downstream enterprises were already on holiday, resulting in almost no inquiries or purchases. Overall market trading was sluggish.

Guangdong: The purchasing sentiment for refined zinc in the Guangdong area was 1.68, and the selling sentiment was 2.02. As the Chinese New Year approaches, fewer traders are making shipments in the market, and major downstream plants are also gradually going on holiday, leading to sluggish market trading.

Tianjin: Yesterday, the purchasing sentiment for refined zinc in the Tianjin area was 1.63, and the selling sentiment was 1.87. Zinc prices fluctuated mainly, and the market has essentially entered a holiday pace, with the overall market being relatively quiet.

Ningbo: Yesterday, traders in the Ningbo market had low willingness to sell, and downstream enterprises were basically on holiday. Previous purchasing and stockpiling activities were already completed, resulting in almost no spot transactions. The trading atmosphere remained sluggish.

Social Inventory: On February 11, LME zinc inventory decreased by 1,500 mt to 105,250 mt, a drop of 1.14%. According to SMM communication, domestic inventory increased as of February 9.

Zinc Price Forecast: Overnight, LME zinc recorded a long upper shadow bullish candlestick. Strong non-farm payrolls prompted the market to reduce bets on US Fed interest rate cuts, but continued destocking of LME inventory still provides support for LME zinc. LME zinc is expected to fluctuate at highs today. Overnight, SHFE zinc recorded a small bearish candlestick. Overseas expectations for interest rate cuts weakened, macro influences faded, and coupled with cooling domestic trading, the center of SHFE zinc moved downward. SHFE zinc is expected to experience wide swings.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not intended as decision-making advice.