Persistent Global Inflation Concerns; LME Zinc Posts Five Consecutive Down Sessions [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes on March 4

Futures: Overnight, LME zinc opened at $3,324/mt. After briefly touching a high of $3,353/mt in early trading, it stepped down and hit a low of $3,248/mt during European trading. Bears then reduced open interest and exited, and LME zinc rebounded upward, posting a “V-shaped” reversal. However, momentum was insufficient, and the center edged down slightly again toward the close. It ultimately closed down at $3,272.5/mt, down $35/mt, a decline of 1.06%. Trading volume increased to 20,723 lots, and open interest fell by 346 lots to 226,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,375 yuan/mt. After fluctuating around the daily moving average in early trading, SHFE zinc plunged and fell to a low of 24,360 yuan/mt, then the center returned to around the daily moving average. It ultimately closed down at 24,460 yuan/mt, down 165 yuan/mt, a decline of 0.67%. Trading volume decreased to 81,339 lots, and open interest fell by 5,254 lots to 90,222 lots.

Macro: Trump announced that insurance would be provided for maritime crude oil transportation, and the navy would escort if necessary; US media: the UAE is considering striking Iranian missile facilities; an Israeli official said Saudi Arabia plans to launch an attack on Iran; an Iraqi official: Iraq may be forced to implement production cuts of more than 3 million barrels/day within days; the Fourth Session of the 14th CPPCC National Committee will open at 3:00 p.m. on March 4 at the Great Hall of the People; SHFE adjusted the daily price limit range and trading margin ratios for fuel oil futures-related contracts.

Spot Market:

Shanghai: In Shanghai, purchase sentiment for refined zinc was 2, and shipment sentiment was 2.57. Zinc ingot supply was ample, and traders in the Shanghai market actively offered shipments. Downstream enterprises had relatively low purchasing enthusiasm recently, and overall spot transactions yesterday remained sluggish. To move cargo, traders lowered offers, and spot discounts expanded accordingly.

Guangdong: In Guangdong, purchase sentiment for refined zinc was 1.65, and selling sentiment was 2.18. As downstream enterprises gradually resumed production, there were more traders making shipments yesterday, but premiums quoted for mainstream brands remained relatively high. Spot transactions did not improve significantly. Meanwhile, the price spread between futures contracts widened, and spot premiums held steady.

Tianjin: In Tianjin, purchase sentiment for refined zinc was 1.79, and shipment sentiment was 2.12. Yesterday, zinc prices were in the doldrums, downstream consumption recovery was slow, and Hebei’s environmental protection alert was reinstated. Enterprises mainly restocked for rigid demand. Traders’ shipment premiums held slightly steady, and overall transactions were average.

Ningbo: This week, downstream enterprises gradually resumed work and production, but purchase willingness for purchases remained low recently. Spot market transactions were poor, traders actively offered shipments, and overall spot premiums stayed at low levels.

Social Inventory: On March 3, LME zinc inventory decreased by 1,400 mt to 95,375 mt, a decline of 1.45%; according to SMM communications, as of March 2, domestic inventory again increased sharply by more than 30,000 mt.

Zinc Price Outlook: Overnight, LME zinc recorded five consecutive bearish candlesticks, with the center of the daily candlestick moving lower. As heightened tensions in the Middle East intensified market concerns over persistent global inflation, the US dollar strengthened, putting pressure on the overall base metals complex. However, LME zinc inventory continued to decline, and supply concerns under geopolitical risks suggest that zinc prices are likely to have clear support on the downside. Overnight, SHFE zinc posted a small bullish candlestick, but the center of the daily candlestick edged slightly lower. Overnight zinc prices traded in a narrow range, with relatively strong support at the bottom; attention should be paid to macro developments and the recovery of downstream consumption.

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