LME Inventory Increased by 20kt, LME Zinc Came Under Pressure [SMM Morning Meeting Summary]

SMM, March 18:

Futures: Overnight, LME zinc opened at $3,277/mt. In early trading, LME zinc briefly rose to a high of $3,293/mt, after which bulls reduced positions and LME zinc fluctuated downward all the way, hitting a low of $3,210/mt during the night session. The center then rebounded slightly, and it finally closed down at $3,233/mt, down $46/mt, or 1.4%. Trading volume increased to 13,404 lots, while open interest fell by 3,868 lots to 214,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened at 23,680 yuan/mt. In early trading, SHFE zinc briefly rose to a high of 23,685 yuan/mt, after which bears added positions and SHFE zinc moved downward in fluctuations all the way, hitting a low of 23,440 yuan/mt near the close, and finally closed down at 23,455 yuan/mt, down 275 yuan/mt, or 1.16%. Trading volume fell to 39,416 lots, while open interest increased by 10,738 lots to 91,209 lots.
Macro:
“Fed Whisperer”: The US Fed tended to remain silent this week; Trump lashed out, saying the US was considering withdrawing from NATO, Starmer is not Churchill, and Macron will step down soon; Ali Larijani, secretary of Iran’s Supreme National Security Council, was killed in an attack; Iran’s supreme leader rejected a proposal for peace talks with the US, insisting on defeating the US and Israel and seeking compensation; Iran launched its first attack on upstream oil and gas facilities in the UAE; the Ministry of Finance said that a more proactive fiscal policy will continue to be implemented in 2026; the National Development and Reform Commission (NDRC) introduced a new batch of major foreign investment projects, with planned investment totaling $13.4 billion.
Spot Market:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.28, and shipment sentiment was 2.6. There were relatively many traders making shipments in the Shanghai market. Although there was some sentiment to hold prices firm in the morning market, zinc prices on the futures edged higher, coupled with downstream enterprises having made purchases and priced orders at lower levels the previous day, spot transactions yesterday turned weaker, and spot premiums in the Shanghai market struggled to rise.
Guangdong: Refined zinc purchase sentiment in Guangdong was 2.15, and sales sentiment was 2.42. Driven by the lower center of zinc prices, downstream buyers have recently made more priced purchases. Traders’ quotations yesterday differed relatively little from the previous day, but Guangdong market quotations underwent contract rollover yesterday, with the referenced contract switching from 2604 to 2605. Affected by the price spread between futures contracts, spot premiums moved lower.
Tianjin: Refined zinc purchase sentiment in Tianjin was 2.37, and shipment sentiment was 2.73. Yesterday, zinc prices remained in the doldrums. Downstream buyers had basically all priced orders and picked up goods successively the previous day, so overall priced purchases were relatively few yesterday. Trading was mainly between traders, and traders’ shipment premiums held basically steady with a slight firmness. Overall market transactions weakened from the previous day.
Ningbo: Market supply remained relatively abundant, but traders’ quotations were relatively firm. Spot premiums held steady, but downstream purchase inquiries decreased from the previous day, and overall spot transactions were average. Attention should be paid to subsequent consumption performance.
Social Inventory: On March 17, LME zinc inventory increased by 20,857 mt to 118,375 mt, up 21.41%; according to SMM communication, as of March 16, inventory in China increased.
Zinc Price Outlook: Overnight, LME zinc posted a large bearish candlestick. Macro side, the Iran conflict continued to escalate, and the market awaited the US Fed's upcoming policy decision. Fundamentals side, large volumes of LME zinc were shipped to delivery warehouses, and fundamentals provided weak support for LME zinc. LME zinc broke lower and fell, and it was expected to remain in the doldrums today. Overnight, SHFE zinc extended its four-day losing streak. Macro sentiment remained volatile, zinc ingot inventory in China continued to build up to a high level in recent years, while the increase in LME zinc ingot inventory outside China eased tight supply. External prices dragged domestic prices lower, and SHFE zinc was expected to remain in the doldrums today.

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