Zinc Fundamentals Improved, but Weak Macro Sentiment Limited Its Upside [SMM Morning Meeting Summary]

March 30 Zinc Morning Meeting Summary

Futures: Last Friday, LME zinc opened at $3,074.5/mt. Early in the session, LME zinc extended its move along the daily average and rose all the way to a high of $3,125/mt. It then fell sharply as bulls took profits and exited, touching a low of $3,071/mt near the night session. As bears reduced open interest and exited, LME zinc rose again, with its center moving up to around $3,110/mt, and finally closed up at $3,106.5/mt, up $33/mt, or 1.07%. Trading volume decreased to 9,425 lots, and open interest fell by 1,767 lots to 209,000 lots. Last Friday, the most-traded SHFE zinc 2605 contract opened lower with a gap at 23,250 yuan/mt. Early in the session, SHFE zinc quickly moved lower to a low of 23,190 yuan/mt, then bulls added open interest and pushed SHFE zinc all the way up to a high of 23,415 yuan/mt, after which its center edged down slightly. It finally closed up at 23,370 yuan/mt, up 115 yuan/mt, or 0.49%. Trading volume decreased to 3,354 lots, and open interest fell by 331 lots to 100,000 lots.

Macro: Multiple experts called for a thorough investigation into "Trump insider trading"; anti-Trump rallies broke out across the US; Russia: gasoline exports will be banned starting April 1; Speaker of the Iranian Parliament: the so-called "pre-market news" was a contrarian indicator; Pakistani foreign minister: prepared to host Iran-US peace talks in the coming days; China launched two trade barrier investigations against the US.

Spot Market:

Shanghai: Refined zinc purchasing sentiment in Shanghai was 2.14, and shipment sentiment was 2.57. Zinc prices on the futures market rose MoM in the morning session, but traders showed sentiment to hold prices firm. Spot premiums remained stable last Friday, with some enterprises making relaxed shipments and even raising quotes, while downstream enterprises purchased as needed, and no significant improvement was seen in spot transactions.

Guangdong: Refined zinc purchasing sentiment in Guangdong was 2.07, and sales sentiment was 2.64. The center of zinc prices moved higher. Traders made more shipments, but downstream purchasing enthusiasm weakened due to high prices. Traders lowered quotes slightly, but as the price spread between futures contracts widened, Guangdong spot premiums continued to hold steady.

Tianjin: Refined zinc purchasing sentiment in Tianjin was 1.92, and shipment sentiment was 2.41. Zinc prices fluctuated at highs, and downstream buyers were cautious amid elevated prices, with just-in-time procurement dominating. Trading was mainly among traders, and spot premiums for trader shipments continued to edge lower, with overall market transactions weak.

Ningbo: There were not many traders offering quotes in the market, and spot premiums were relatively firm. Zinc prices on the futures market rose MoM, while downstream enterprises continued to wait and see, and spot market transactions were still mainly driven by purchasing as needed.

Social Inventory: As of March 27, LME zinc inventory decreased by 275 mt to 115,375 mt, down 0.24%; according to SMM, as of March 26, inventory in China continued to decline.

Zinc Price Outlook: Last Friday, LME zinc posted a small bullish candlestick, with the 10-day moving average above acting as resistance. Although there was still a risk of escalation in the geopolitical conflict in the Middle East last Friday and macro sentiment was weak, concerns over mine-side energy supply arising from such escalation also increased, lending strength to zinc prices. Last Friday, SHFE zinc recorded a five-day winning streak, with the 5-day and 10-day moving averages below providing support. In April, routine maintenance at smelters increased, and inventory continued destocking, improving zinc fundamentals, but weak macro sentiment limited the upside.

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