LME Inventory Runs at Low Levels, LME Zinc Fluctuates at Highs [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Briefing, June 16

Market: Overnight, LME zinc opened at $3,591/mt, then fluctuated upward to hit a high of $3,623/mt before pulling back all the way, touching a low of $3,568/mt during the session, and finally closed up at $3,584.5/mt, up $1.5/mt or 0.04%. Trading volume fell to 11,715 contracts, while open interest rose by 4,047 contracts to 246,000 contracts. Overnight, the most-traded SHFE zinc 2608 contract opened at 24,840 yuan/mt, then moved narrowly around the daily average line, hitting a high of 24,860 yuan/mt during the session. Near the end, it dipped to 24,785 yuan/mt and finally closed down at 24,820 yuan/mt, down 55 yuan/mt or 0.22%. Trading volume fell to 21,904 contracts, while open interest increased by 761 contracts to 79,941 contracts.

Macro: The US Strategic Petroleum Reserve has fallen to its lowest level in 43 years; the Singapore Exchange plans to establish an over-the-counter gold clearing system; Trump said he would allow Iran to conduct low-level uranium enrichment; Iran stated that shipping services in the Strait of Hormuz will be charged “within a specific period”; the Israeli defense chief said he had informed Trump that they will never withdraw; China has made breakthroughs in key materials for silicon-based quantum chips.

Spot Market:

Shanghai: In Shanghai, the purchasing sentiment for refined zinc was 1.84 and the selling sentiment was 2.58 yesterday. Traders in the Shanghai market were mainly selling, but zinc prices on the futures rose significantly in the morning session. Downstream enterprises, having purchased a fair amount on dips last week, adopted a wait-and-see stance again yesterday, resulting in sluggish overall spot trades and slightly weaker spot premiums.

Guangdong: In Guangdong, the purchasing sentiment for refined zinc was 1.90 and the selling sentiment was 2.45 yesterday. The futures market gained some ground, and some traders still quoted relatively high prices, but high premiums led to weak deals. Overall, spot trades turned sluggish due to the rise in futures prices.

Tianjin: In Tianjin, the purchasing sentiment for refined zinc was 2.03 and the selling sentiment was 2.51 yesterday. Zinc prices surged, and downstream enterprises had already stockpiled a significant amount via fixed-price purchases earlier, so buying interest was low yesterday. Traders held prices firm when selling, with premiums holding steady. Overall, market transactions weakened.

Ningbo: Zinc ingot inventory in the Ningbo market continued to build up, with ample supply. However, as zinc prices on the futures rose significantly in the morning session, downstream enterprises barely made any inquiries or purchases. Shipments in the Ningbo spot market were sluggish, and some traders lowered their spot quotations.

Social Inventory: On June 15, LME zinc inventory fell by 600 mt to 107,150 mt, down 0.56%. According to SMM’s communication, as of June 15, China’s zinc inventory edged up slightly.

Zinc Price Forecast: Overnight, LME zinc formed a bearish candlestick, with support from the 5-day moving average below. The US and Iran reached a memorandum of understanding, macro sentiment remains positive, and LME zinc inventory stays at persistently low levels. As a result, LME zinc is hovering at highs. Overnight, SHFE zinc recorded a bearish candlestick, with the 40-day moving average below providing support. The US-Iran agreement boosted macro sentiment, but on the fundamentals side, China's zinc ingot inventory recorded another slight increase, and weak consumption dragged down the zinc price trend. Amid the tug-of-war between longs and shorts, SHFE zinc is expected to hover at highs.

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