Expectations for the End of Geopolitical Conflict Cool, LME Zinc Stops Rising and Starts to Fall [SMM Morning Meeting Summary]

April 3 Zinc Morning Briefing Summary

Futures: Overnight, LME zinc opened at $3,288/mt. After briefly consolidating around the daily average line in early trading, the center of LME zinc moved lower all the way, touching a low of $3,215.5/mt during European trading hours. It then fluctuated upward for a recovery and hit a high of $3,299/mt in the night session, before pulling back again near the close and finally settling lower at $3,256.5/mt, down $27/mt, or 0.82%. Trading volume increased to 15,694 lots, and open interest increased by 844 lots to 211,000 mt. Overnight, the most-traded SHFE zinc 2605 contract opened at 23,740 yuan/mt. In early trading, SHFE zinc fluctuated upward to a high of 23,815 yuan/mt, after which bulls reduced positions and exited, sending SHFE zinc sharply lower to an intraday low of 23,640 yuan/mt near the close. It finally settled lower at 23,645 yuan/mt, down 90 yuan/mt, or 0.38%. Trading volume decreased to 44,094 lots, while open interest increased by 343 lots to 83,944 lots.

Macro: Trump’s nationwide speech failed to convince the market that the war is about to end or that the Strait of Hormuz issue will be resolved; Turkey’s gold reserves plunged by nearly 120 mt over two weeks; OPEC+ may consider further raising output quotas at its Sunday meeting; Russian crude oil export capacity was reduced by 1 million barrels per day due to Ukrainian attacks, making production cuts inevitable; the US officially adjusted tariffs on steel, aluminum, and copper; US Fed's Williams said inflation and employment risks are becoming more balanced and he is inclined to stay on hold; reports said Iran and Oman are drafting a transit agreement for the Strait of Hormuz.

Spot Market:

Shanghai: Refined zinc purchase sentiment in Shanghai was 2.1, and shipment sentiment was 2.73. Zinc prices on the futures continued to rise, while zinc ingot supply in the market was ample. Downstream enterprises were wary of high prices, and there were not many inquiries or purchases of zinc ingots yesterday. Actual transactions still mainly met rigid demand, and overall spot trades were poor.

Guangdong: Refined zinc purchase sentiment in Guangdong was 2.01, and sales sentiment was 2.81. Yesterday, zinc prices continued to hover at highs, with downstream purchases mostly for rigid demand. Market transactions were light, trader quotations were basically flat from the previous day, and spot premiums were unchanged.

Tianjin: Refined zinc purchase sentiment in Tianjin was 1.81, and shipment sentiment was 2.45. Yesterday, zinc prices continued to fluctuate at highs. Downstream purchase willingness was not strong, and inquiries were limited. Market trading was mainly dominated by traders, trader shipment premiums were trimmed slightly, and overall market transactions were average.

Ningbo: Ningbo spot premiums were basically stable from the previous day, but futures zinc prices rose significantly. Some downstream enterprises were wary of high prices, and spot transactions were basically driven by rigid demand and mostly based on later pricing. Overall market trading performance was average.

Social Inventory: As of April 2, LME zinc inventory decreased by 275 mt to 113,950 mt, down 0.24%; according to SMM, China inventory began to see an inventory buildup as of April 2.

Zinc Price Outlook: Overnight, LME zinc stopped rising and started to fall, with support from the middle Bollinger Band below. As expectations for a swift end to the Middle East conflict cooled, base metals generally fell. Zinc posted a relatively smaller decline due to a sharp increase in LME registered warrants, and attention after the holiday should focus on changes in LME inventory. Overnight, SHFE zinc recorded a third consecutive losing session, but the center of the daily candlestick moved higher, while the middle Bollinger Band above provided resistance. Due to a sharp increase in LME cancelled warrants and concerns over declining domestic TCs, the center of zinc prices moved higher, but the shift of social inventory to an increase limited its gains.

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