Macro Sentiment Driven, LME Zinc Center Shifted Lower [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes on March 6

Futures: Overnight, LME zinc opened at $3,330/mt. Initially fluctuating around the daily average line, it later fluctuated downward as bulls reduced positions and exited, trading below the daily average line. By the session's end, the price center shifted downward to around $3,235/mt, closing at $3,230/mt, down $89/mt (-2.68%). Trading volume increased to 14,767 lots, while open interest decreased by 2,819 lots to 220,000. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,400 yuan/mt. After briefly consolidating around the daily average line, it traded below the line, with the price center continuing to decline by the session's end. It closed at 24,180 yuan/mt, down 465 yuan/mt (-1.89%). Trading volume decreased to 68,346 lots, while open interest increased by 4,355 lots to 86,966 lots.

Macro: Trump stated he must personally oversee Iran's succession arrangements and rejects Khamenei's son as the next Supreme Leader. CME Group lowered margin requirements for gold and silver futures. A White House official indicated measures to address rising oil prices may be announced as early as Thursday (EST). Iran's military claimed to have struck the US aircraft carrier Lincoln with drones. Sources reveal Poland's central bank plans to sell gold reserves to fund national defense programs. The government work report outlined major development targets for 2026. CSRC Chairman Wu Qing will address capital market reform and development issues at a press conference on the afternoon of March 6.

Spot market:

Shanghai: The refined zinc purchasing sentiment in Shanghai was 2.6, while the shipment sentiment was 1.98. Zinc ingot inventories at Shanghai warehouses continued accumulating. Traders actively quoted shipments, but with futures prices rising significantly in the morning session, downstream enterprises exhibited strong wait-and-see sentiment. Few inquiries and purchases occurred yesterday, resulting in poor overall spot transactions and widening spot discounts.

Guangdong: The refined zinc purchasing sentiment in Guangdong was 1.75, while the sales sentiment was 2.11. Overall, as zinc prices rose yesterday, downstream purchasing enthusiasm weakened. Combined with prior point-price purchases at lower levels, market activity declined. Some spot cargoes were quoted higher but saw limited actual transactions, with spot premiums remaining flat compared to the previous day.

Tianjin: The refined zinc purchasing sentiment in Tianjin was 1.81, while the shipment sentiment was 2.21. With zinc prices rebounding yesterday, downstream enterprises cautiously avoided high prices, mainly restocking small quantities at lows. Traders maintained slightly stable shipment premiums, but overall market transactions remained sluggish.

Ningbo: Zinc ingot supply in Ningbo remained ample. Yesterday morning's significant price increase led to fewer purchase inquiries from downstream enterprises, compounded by some enterprises holding raw material inventories. Spot transactions performed poorly, prompting traders to further lower spot quotations to facilitate shipments.

Social inventory: As of March 4, LME zinc inventory decreased by 250 mt to 95,000 mt, a decline of 0.26%; according to SMM market communication, as of March 4, domestic inventory increased slightly.

Zinc Price Outlook: Overnight, LME zinc posted a large bearish candlestick, with the upper Bollinger Bands midline acting as resistance and the 60-day moving average below providing support. With the escalation of the Middle East conflict, a stronger US dollar, and oil prices hitting a new high since July of the year before last, inflation expectations rose, expectations for US Fed interest rate cuts within the year were lowered again, base metals fell broadly, and the center of zinc prices moved lower. Overnight, SHFE zinc posted a small bearish candlestick, with the 5-day moving average above acting as resistance and the 60-day moving average below providing support. Overnight, base metals fell broadly; meanwhile, with a slow recovery in consumption on the fundamentals side and social inventory increasing again, upside room for zinc was under pressure.

Data Source Statement: All data other than public information are processed by SMM based on public information, market communication, and SMM’s internal database models, for reference only and not constituting decision-making advice.