Macro sentiment remains favorable, LME zinc rises [SMM Morning Meeting Minutes]

SMM February 9:

Futures: Last Friday, LME zinc opened at $3,280/mt. At the beginning of the session, LME zinc briefly fell to a low of $3,262.5/mt, then bulls increased their positions, and LME zinc fluctuated upward, rising rapidly during the night session to touch a high of $3,387.5/mt, finally closing up at $3,383/mt, an increase of $84.5/mt, a gain of 2.56%. Trading volume increased to 9,286 lots, and open interest increased by 708 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,575 yuan/mt. At the start of the session, SHFE zinc quickly fell to a low of 24,450 yuan/mt, then bulls increased their positions, and SHFE zinc fluctuated upward, touching a high of 24,660 yuan/mt towards the end of the session, finally closing up at 24,600 yuan/mt, an increase of 110 yuan/mt, a gain of 0.45%. Trading volume decreased to 230.69 million lots, and open interest increased by 405 lots to 74,591 lots.
Macro:
The Pentagon's "Pizza Index" surges; Japan's ruling coalition secures a majority of seats; Zelenskyy: The US hopes Russia and Ukraine reach a peace agreement before June; Denmark: Negotiations with the US on Greenland fall short of expectations; Retail investors continue to bet heavily as silver plummets; Besant downplays expectations of rapid balance sheet reduction by the US Fed; PBOC increases gold holdings for the 15th consecutive month; Multiple banks raise deposit rates ahead of the Chinese New Year; Eight departments issue new regulations on virtual currency oversight; Tesla to increase investments in AI and energy in China.
Spot Market:
Shanghai: Last Friday, the purchasing sentiment for refined zinc in the Shanghai area was 1.88, and the shipment sentiment was 2.43. In the morning session, zinc futures prices pulled back all the way. Traders in the Shanghai market continued to hold prices firm, and spot premiums moved higher. Although some downstream users placed some orders at lower prices in the morning, new purchases were limited, and overall spot transactions remained sluggish.
Guangdong: The purchasing sentiment for refined zinc in the Guangdong area was 1.77, and the sales sentiment was 2.23. Last Friday, zinc prices pulled back, but actual market demand weakened due to enterprise holidays. Although some traders offered at higher prices, actual transactions still required discounts. Affected by this, spot premiums and discounts continued to decline last Friday.
Tianjin: The purchasing sentiment for refined zinc in the Tianjin area last Friday was 1.82, and the shipment sentiment was 2.11. Last Friday, zinc prices continued to weaken, but most downstream enterprises were on holiday, resulting in limited response and sluggish transactions. Traders held shipment premiums largely stable, and overall market transactions were average.
Ningbo: Downstream enterprises in Ningbo have successively halted production for the holidays. Last Friday, there were almost no inquiries or purchases in the market, and traders also quoted prices passively. Spot premiums remained low and stable, and overall spot transactions remained sluggish.
Social Inventory: On February 6, LME zinc inventory decreased by 200 mt to 107,600 mt, a drop of 0.19%. According to SMM communication, as of February 5, domestic inventory increased.
Zinc Price Forecast: Last Friday, the LME zinc recorded a large bullish candlestick, with the US dollar index retreating from highs, and geopolitical uncertainties persisting. Low LME inventory provided support for LME zinc, pushing its center higher. Last Friday, SHFE zinc recorded a small bullish candlestick, as overseas macro sentiment remained relatively positive. SHFE zinc saw mixed bullish and bearish factors, primarily following macro sentiment, resulting in a slight upward shift in its center.

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