Rising Prices of Surrounding Metals Drove a Rise in LME Zinc [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes, March 5

Futures: Overnight, LME zinc opened at $3,272.5/mt. In early trading, LME zinc fluctuated around the daily moving average, then bears reduced positions and exited, driving LME zinc higher throughout the session and trading above the daily moving average. In the night session, the center moved up to around $3,315/mt, and it finally closed up at $3,319/mt, up $46.5/mt, a gain of 1.42%. Trading volume fell to 11,839 lots, and open interest decreased by 3,402 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,580 yuan/mt. During the session, SHFE zinc fluctuated rangebound around the daily moving average, with an intraday swing of no more than 200 yuan. It finally closed up at 24,660 yuan/mt, up 155 yuan/mt, a gain of 0.63%. Trading volume fell to 62,221 lots, and open interest decreased by 3,107 lots to 84,327 lots.

Macro: Kurdish armed forces launched a ground offensive against Iran? Information from all sides remained unclear; Iran strongly denied rumors of secret peace talks and accused The New York Times of waging “psychological warfare”; US ADP employment data came in above expectations; Bessent confirmed the timetable for raising tariffs, as soon as this week; sources: the EU obtained a “no additional tariffs” commitment from the US; spokesperson for the Fourth Session of the 14th National People’s Congress: this year will continue to adhere to expanding domestic demand as the strategic cornerstone.

Spot market:

Shanghai: In Shanghai, refined zinc purchase sentiment was 2.02 and shipments sentiment was 2.56. There were still many traders shipping in the market. Zinc prices in the futures weakened in the afternoon session the day before yesterday, and some downstream enterprises fixed prices on dips. Yesterday, zinc prices in the futures rebounded, and downstream enterprises’ wait-and-see sentiment returned. Overall spot transactions showed mediocre performance, and spot discounts stayed at low levels.

Guangdong: In Guangdong, refined zinc purchase sentiment was 1.77 and sales sentiment was 2.08. Overall, as time passed, Guangdong enterprises gradually resumed operations and production. Downstream demand showed some purchasing needs, but overall spot transactions remained average. However, current market premiums were relatively low, so traders’ quotes were relatively firm, and spot premiums rose.

Tianjin: In Tianjin, refined zinc purchase sentiment was 1.82 and shipments sentiment was 2.15. Yesterday, zinc prices fluctuated. The recovery of downstream consumption was slow, and environmental protection measures in northern China restricted vehicles and imposed production restrictions. Enterprises mainly restocked small amounts on dips. Traders’ shipment premiums held steady with a slight firming, and overall market transactions were sluggish.

Ningbo: Market supply remained ample, and traders actively shipped and quoted. Although downstream enterprises had gradually resumed work recently, some held certain raw material inventory. Yesterday, inquiries and purchases were still limited, spot transactions remained weak, and overall premiums stayed at low levels. Social inventory: On March 4, LME zinc inventory increased by 125 mt to 95,250 mt, a decline of 0.13%; according to SMM communications, as of March 2, domestic inventory again rose sharply by more than 30,000 mt.

Zinc Price Outlook: Overnight LME zinc ended its decline and moved into positive territory, with the 60-day daily average providing support below. Overnight, a weaker US dollar boosted broad gains in base metals. Meanwhile, amid the Middle East conflict, the impact on the aluminum supply side increased, driving a sharp surge in LME aluminum and also lifting zinc prices. Overnight, SHFE zinc posted a small bullish candlestick, with the middle Bollinger Bands line above forming resistance. Zinc prices were driven by the LME and remained relatively strong; however, in the absence of clear destocking, upside room for zinc prices remained constrained.

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