US May Lower Tariffs on China, LME Zinc Rebounds from Low Levels [[SMM Zinc Morning Meeting Summary]]

Zinc Morning Meeting Summary on May 9

Futures Market: Overnight, LME zinc opened at $2,618/mt. After opening, LME zinc fluctuated considerably around the daily average line, hitting a low of $2,590/mt during the mid-session. During the night session, LME zinc rebounded from the lows, reaching a high of $2,640.5/mt at the end of the session, and finally closed up at $2,636/mt, up $23/mt or 0.88%. Trading volume increased to 11,613 lots, and open interest rose by 2,040 lots to 213,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened at 22,155 yuan/mt. In the early session, SHFE zinc dipped slightly to 22,075 yuan/mt, then fluctuated upward, reaching a high of 22,350 yuan/mt at the end of the session, and finally closed up at 22,340 yuan/mt, up 165 yuan/mt or 0.74%. Trading volume decreased to 69,484 lots, and open interest increased by 275 lots to 120,000 lots.

Macro: Trump announced a trade deal with the UK and intended to reach an agreement with the EU. Trump again called Powell "Mr. Tardy" and a fool. The Bank of England cut interest rates by 25 basis points, with voting showing divisions. Xi Jinping and Putin signed a joint statement on further deepening the China-Russia comprehensive strategic partnership of coordination for a new era. China and Russia issued a joint statement on global strategic stability. Wang Wentao, Minister of Commerce, stated that efforts would be made to accelerate the strengthening of domestic demand, particularly consumption. The Hongmeng computer made its debut, marking a breakthrough for domestic PC operating systems.

Spot Market:

Shanghai: There were not many traders shipping goods in the Shanghai market. However, imported zinc ingots began to flow into the domestic market recently, providing some supplement to the market supply. The futures market rebounded slightly, but downstream enterprises had low purchase willingness due to high prices, maintaining just-in-time procurement. Spot transactions in the market were mainly among traders.

Guangdong: It was on par with Shanghai spot. Overall, trading in the Guangdong market weakened yesterday. In the morning session, traders reported relatively high premiums, but downstream procurement sentiment was weak under high premiums. Traders continuously lowered premiums to facilitate shipments. With the futures market's center moving upward yesterday, market transactions were sluggish, and spot premiums and discounts declined.

Tianjin: Tianjin reported discounts of around 20 yuan/mt against the Shanghai market. The futures market fluctuated, with generally moderate downstream demand. Restocking was mainly for just-in-time needs, and some downstream enterprises still held bearish sentiment. Traders' shipment quotes slightly declined, with premiums falling, and overall transactions were moderate.

Ningbo: It reported premiums of 60 yuan/mt against Shanghai spot. Traders in the Ningbo market shipped goods in a laid-back manner, with downstream enterprises continuing just-in-time procurement and low purchase enthusiasm. Spot transactions were moderate, and Ningbo's spot premiums remained generally flat compared to the previous day.

Social Inventory: LME zinc inventory decreased by 750 mt to 170,650 mt on May 8, a decline of 0.44%. According to SMM communications, as of May 8, the total zinc ingot inventory across seven locations tracked by SMM was 83,300 mt, an increase of 6,300 mt from April 30 and a decrease of 800 mt from May 6, indicating a decline in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc recorded a bullish candlestick, with the upper middle Bollinger Band acting as resistance. The US and the UK reached a trade agreement, and the US also indicated its intention to lower import tariffs on China, boosting market macro sentiment. During the night session, zinc prices rebounded from low levels. Overnight, SHFE zinc recorded a bullish candlestick, with the upper 10-day moving average acting as resistance. On Thursday, SMM zinc ingot inventory fell by 800 mt WoW to 83,300 mt. Zinc ingot destocking occurred again on a small scale, providing support for zinc prices. Coupled with the boost from improved macro sentiment, the center of SHFE zinc prices shifted slightly higher.