Trade risks rise again, LME zinc records a bullish candlestick [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Summary on May 26
Futures Market: On Friday, LME zinc opened at $2,705.5/mt. In the early session, LME zinc fluctuated upward along the daily moving average, reaching a high of $2,721.5/mt during European trading hours. Subsequently, as bulls reduced their positions, LME zinc fluctuated downward, hitting a low of $2,670.5/mt during the night session before stabilizing and rebounding. LME zinc consolidated near the daily moving average, closing up at $2,712.5/mt, up $8/mt or 0.3%. Trading volume increased to 8,815 lots, while open interest remained unchanged at 212,000 lots. On Friday, the most-traded SHFE zinc 2507 contract opened at 22,155 yuan/mt. In the early session, SHFE zinc briefly declined to a low of 22,085 yuan/mt before bears reduced their positions, causing SHFE zinc to fluctuate upward, reaching a high of 22,300 yuan/mt. It then traded sideways, closing up at 22,280 yuan/mt, up 65 yuan/mt or 0.29%. Trading volume decreased to 67,614 lots, while open interest fell by 1,346 lots to 113,000 lots.
Macro: Trump changed his stance towards Europe again; US Treasury Secretary: The 50% tariff threat is a response to the EU's pace of action, and significant progress has been made in trade negotiations in Asia; Fed's Goolsbee: There is still a possibility of an interest rate cut in the next 10-16 months; The EU is considering removing 20 banks from SWIFT and lowering the price cap on Russian oil as part of sanctions against Russia; Iran and the US held the fifth round of indirect talks, which reportedly lasted only three hours; Musk said he has returned to full-time work; President Xi Jinping: China is willing to open a new chapter in its all-round strategic partnership with Germany and make new contributions to the stable growth of the world economy; Ministry of Finance and Ministry of Emergency Management: Urgently allocated 30 million yuan to support Guizhou in geological disaster relief efforts.
Spot Market:
Shanghai: On Friday, Kylin zinc ingots arrived, increasing the market supply. However, as futures prices rose compared to Thursday, downstream enterprises' willingness to inquire and purchase was average. Spot transactions weakened compared to Thursday, with overall trading mainly among traders.
Guangdong: Overall, as the weekend approached, purchasing enterprises in the market decreased. Meanwhile, the zinc price center shifted higher in the morning session compared to the previous day, leading to a decline in spot market activity. Weakened transactions drove spot premiums/discounts slightly lower.
Tianjin: Futures prices rebounded slightly, but as the weekend approached, some downstream enterprises made small replenishments. The sentiment for replenishing before the Dragon Boat Festival was average. Traders maintained stable offering prices on Friday, with trading mainly among traders and overall market transactions being average.
Ningbo: Market supply remained unchanged. Traders continued to pre-sell zinc ingot quotations. Spot premiums remained stable on Friday. Downstream enterprises purchased as needed, with spot transactions being average. It is expected that with the arrival of zinc ingots next week, spot premiums may decline accordingly.
Social inventory: On May 23, LME zinc inventory decreased by 2,725 mt to 153,500 mt, a drop of 1.74%. According to communication with SMM, as of Thursday (May 22) this week, the total zinc ingot inventory across seven locations tracked by SMM was 80,400 mt, a decrease of 5,900 mt from May 15 and a decrease of 3,400 mt from May 19. Domestic inventory recorded a decline.
Zinc price outlook: Last Friday, LME zinc recorded a small bullish candlestick with a long lower shadow, retracing to the 5/10-day moving average. Trump once again threatened to escalate the trade war, proposing to impose a 50% tariff on the EU starting from June 1. The US dollar index declined, and non-ferrous metals generally rose. Meanwhile, LME inventory continued to record a decline, and LME zinc fluctuated upward. Last Friday, SHFE zinc recorded a bullish candlestick, with the 10-day moving average acting as resistance above. Trump once again escalated the trade war, and the US dollar index weakened, with non-ferrous metals generally rising. On the fundamental side, the expectation of a zinc ingot supply surplus still exists, but consumption remains resilient. SHFE zinc is expected to continue fluctuating.