Supported by the improving expectations for the geopolitical conflict, LME zinc holds up well [SMM Morning Meeting Summary]

Zinc Morning Meeting Notes on June 23

Futures: Overnight, LME zinc opened at $3,560/mt. After a brief surge at the start, it dipped to a low of $3,546.5/mt. Subsequently, bulls bought on dips, driving LME zinc to fluctuate upward and hit a high of $3,619.5/mt during the night session. Near the close, the center edged slightly lower, and it finally closed up at $3,602/mt, up $47/mt or 1.32%. Trading volume increased to 12,125 lots, and open interest increased by 3,291 lots to 261,000 lots. Overnight, the most-traded SHFE zinc 2608 contract opened at 24,920 yuan/mt. During the session, SHFE zinc fluctuated around the daily average line with a range of no more than 200 yuan/mt, and finally closed up at 24,855 yuan/mt, up 130 yuan/mt or 0.53%. Trading volume decreased to 53,690 lots, and open interest increased by 5,286 lots to 102,000 lots.

Macro: CME platform experienced a "connection interruption", and trading was disrupted; there were unusual movements in the US and Japan during the session, and it was reported that the finance ministers of the US and Japan held an emergency online meeting; UK Prime Minister Starmer announced he will resign; the US eased oil sanctions on Iran and granted a 60-day temporary license; three departments issued the 《Action Plan for Stabilizing and Optimizing the Utilization of Foreign Investment》.

Spot Market:

Shanghai: Refined zinc purchase sentiment in Shanghai was 2.00, and selling sentiment was 2.63. Shanghai zinc ingot inventory continued to build up, and traders mainly focused on selling. Although the zinc price in the futures market edged down in the morning, it did not reach the psychological price level of downstream enterprises. Most downstream zinc users adopted a wait-and-see stance. Inquiry and purchase willingness were average yesterday, and overall spot trades were sluggish.

Guangdong: Refined zinc purchase sentiment in Guangdong was 1.81, and selling sentiment was 2.5. Quotations in the Guangdong market still showed some divergence yesterday, and overall transactions were weak. End-user purchase willingness was sluggish, and there was a certain wait-and-see sentiment in the market. Spot premiums held stable.

Tianjin: Refined zinc purchase sentiment in Tianjin was 1.92, and selling sentiment was 2.43. Futures pulled back slightly yesterday, but consumption was weak and downstream purchase sentiment was not high. Tianjin continued to see inventory buildup, and traders lowered their spot premiums slightly when selling. Overall market transactions were average.

Ningbo: Ningbo zinc ingot inventory continued to build up, with many traders selling in the market. However, some downstream zinc users still had pre-holiday purchase inventory that had not been consumed, leading to poor purchase willingness yesterday. The decline in the zinc price on the futures market was limited, and spot premiums remained basically stable.

Social inventory: On June 22, LME zinc inventory decreased by 325 mt to 123,450 mt, a decline of 0.26%; according to SMM, as of June 22, domestic inventory increased by 7,200 mt to 275,200 mt.

Zinc price outlook: Overnight, LME zinc recorded a bullish candlestick. The 10-day and 20-day moving averages provide support below, while the upper Bollinger Band forms resistance above. US-Iran preliminary negotiations might pave the way for reaching a war agreement, sparking a resurgence of optimism, with LME zinc holding up well. Overnight, SHFE zinc recorded three consecutive bearish candles, though its daily candlestick center moved higher, finding support from the middle Bollinger Band below. Overnight, driven by the LME market, SHFE zinc fluctuated at highs, yet weak downstream consumption drove social inventory up to 275,200 mt, limiting the upside of zinc prices.

Data source statement: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and do not constitute decision-making advice.