Futures Market:
Overnight, LME zinc opened at $2,808/mt. At the beginning of the session, LME zinc fluctuated around the daily moving average, dipping to a low of $2,801/mt. During the European trading hours, short positions were reduced, pushing LME zinc up to a high of $2,846/mt. Entering the night session, LME zinc gradually pulled back below the daily moving average, with the center fluctuating around $2,810/mt near the session's end. It ultimately closed higher at $2,809.5/mt, up $1.5/mt or 0.05%. Trading volume increased to 108,000 lots, while open interest decreased by 3,271 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2504 contract opened higher with a gap at 23,655 yuan/mt. At the beginning of the session, SHFE zinc fluctuated around the daily moving average, reaching a high of 23,670 yuan/mt. Subsequently, long positions were reduced, causing SHFE zinc to fluctuate downward below the daily moving average. During the session, SHFE zinc attempted to break above the daily moving average but faced resistance and pulled back, ultimately closing higher at 23,580 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 51,970 lots, while open interest fell by 763 lots to 91,061 lots.
Macro:
Trump confirmed that tariffs on Mexico and Canada will take effect on March 4. US Fed official Harker stated that current policies do not appear significantly restrictive and may require maintaining interest rates unchanged for a considerable period. He also noted that current stock market valuations are relatively high. Trump expressed efforts to help Ukraine reclaim as much land as possible, while Putin indicated that Russia and the US are ready to rebuild cooperative relations. Sources revealed that OPEC+ remains hesitant about increasing production in April. The National Energy Administration stated that the cut-throat competition in the PV manufacturing industry has not been fundamentally resolved.
Spot Market:
Shanghai: In the early session, the market quoted cargoes with invoices dated next month at an average price of -5~5 yuan/mt, with limited quotes against the futures market. During the second trading session, ordinary domestic brands were quoted at discounts of 10~0 yuan/mt against the 2503 contract, Huize was quoted at a premium of 100 yuan/mt, Baiyin at a premium of 20 yuan/mt, and high-end brand Shuangyan at a premium of 110 yuan/mt against the 2503 contract. Zinc ingot inventories in Shanghai warehouses continued to build up. Zinc prices on the futures market remained basically flat compared to the previous day, but downstream enterprises, having purchased at lower prices earlier in the week, currently hold sufficient raw material inventories and maintain a bearish outlook on zinc prices. As a result, their willingness to inquire and purchase has declined, and some suppliers reported weaker spot transactions, with spot premiums remaining stable.
Guangdong: Spot prices were on par with Shanghai, narrowing the Shanghai-Guangdong price spread. In the first session, suppliers quoted Qilin, Mengzi, Huize, Feilong, and Lantian zinc at discounts of 25~5 yuan/mt. In the second session, Qilin and Lantian zinc were quoted at discounts of 5 yuan/mt against online prices. Overall, recent declines in zinc prices have improved spot transactions in Guangdong, with downstream restocking at lower prices. However, trading among market participants showed slight divergence, with some traders exhibiting sentiment to stand firm on quotes, leading to higher spot premiums. As downstream consumption gradually improves, Guangdong premiums and discounts are expected to adjust gradually.
Tianjin: Tianjin's spot prices were at a discount of approximately 10 yuan/mt compared to Shanghai. By midday, Xinzi was quoted at parity to a premium of 0~10 yuan/mt against the 03 contract, Xikeng at a discount of 20~30 yuan/mt, Bailing at a discount of 0~10 yuan/mt, and high-end brand Zijin at a premium of 30~50 yuan/mt. Zinc prices on the futures market continued to pull back yesterday. Downstream enterprises had made significant purchases earlier in the week, and yesterday's activity was mainly focused on restocking as needed. Some enterprises remain bearish, and with prior purchases, Tianjin zinc ingot inventories declined. Traders exhibited slight sentiment to stand firm on quotes, leading to a slight increase in premiums. Overall market transactions were weaker compared to the previous two days.
Ningbo: Spot prices were quoted at a premium of 20 yuan/mt over Shanghai, with mainstream quotes in Ningbo against the 2503 contract. In the first session, Qilin was quoted at a premium of 20~30 yuan/mt, Honglu-V at a premium of 30 yuan/mt, and Hualian at a premium of 20 yuan/mt against the 2503 contract. In the second session, traders' quotes remained unchanged from the first session. At the beginning of the week, zinc ingots at the port were mostly shipped out. Market traders were reluctant to sell at low prices and slightly raised spot premium quotes yesterday. Despite the futures market remaining at low levels, some downstream enterprises had completed purchasing as needed earlier, and market transactions did not show further improvement yesterday.
Social Inventory:
On February 27, LME zinc inventories decreased by 425 mt to 164,950 mt, a decline of 0.26%. According to SMM, as of February 27, total zinc ingot inventories across seven regions monitored by SMM stood at 145,300 mt, an increase of 8,200 mt compared to February 20 and a decrease of 300 mt compared to February 24, with domestic inventories recording a decline.
Zinc Price Forecast:
Overnight, LME zinc recorded a long upper shadow candlestick, with support provided by the lower Bollinger Band. The reduction in overseas inventories offers some support for zinc prices. Trump confirmed that tariffs on Mexico and Canada will take effect on March 4, while US Fed officials indicated that interest rates may need to remain unchanged for a considerable period. LME zinc is expected to maintain a fluctuating trend in the short term. Overnight, SHFE zinc recorded a bearish candlestick, with resistance from the 10-day and 60-day moving averages and support from the lower Bollinger Band. Fundamentally, there is some expectation of increased supply, while downstream consumption is still recovering. Zinc prices are expected to maintain a fluctuating trend in the short term.
![Monthly Production Declined: Refined Zinc Faces Dual Pressure from Raw Material Supply and Costs [SMM Analysis]](https://imgqn.smm.cn/usercenter/qdibi20251217171755.jpg)
