LME Zinc: At the beginning of the week, LME zinc maintained the fluctuating trend of the previous week. Subsequently, the "steel tariffs" imposed by the Trump administration escalated global trade tensions. The intensification of the Russia-Ukraine conflict earlier also led to a rapid rise in geopolitical risks, continuously strengthening market risk-averse sentiment and driving LME zinc prices higher. However, the subsequent conclusion of direct negotiations between Russia and Ukraine, as well as news of possible direct consultations among major world leaders, weakened market risk-averse sentiment. Meanwhile, the US dollar index continued to strengthen, causing LME zinc prices to drop back slightly. Nevertheless, supported by the continuous decline in overseas inventories, LME zinc prices continued to rise. Amidst the uncertain trade situation recently, the US April factory orders monthly rate fell below the previous and expected values. Affected by weak economic data, the US dollar index declined, continuously supporting the upward trend of LME zinc. Subsequently, influenced by the uncertainty of market tariffs, LME zinc prices dropped back slightly. However, the "unexpectedly weak" US May ADP employment data reignited market risk-averse sentiment, causing LME zinc prices to stop falling and stabilize. Subsequently, LME zinc continued to maintain a fluctuating trend. As of 15:00 this Thursday, LME zinc closed at $2,692.5/mt, up $63/mt or 2.40%.
SHFE Zinc: At the beginning of the week, SHFE zinc was closed for one day due to the domestic Dragon Boat Festival holiday. Subsequently, from a fundamental perspective, according to communication with SMM, as of Tuesday this week, the total zinc ingot inventory across seven locations tracked by SMM was 77,400 mt, with domestic inventories recording an increase. Downstream consumption gradually weakened. Meanwhile, influenced by the linkage between SHFE and LME zinc, SHFE zinc prices continued to decline. Then, the relatively weak performance of US economic data led to a continuous decline in the US dollar index, prompting SHFE zinc to open higher with a gap and continue to rise. Subsequently, the uncertainty of market tariff policies persisted, but the "unexpectedly weak" performance of US ADP data also intensified market risk-averse sentiment, causing SHFE zinc to open lower with a gap and rise slightly. Then, according to communication with SMM, as of Thursday this week, the total zinc ingot inventory across seven locations tracked by SMM was 79,300 mt, with domestic inventories continuing to increase. Meanwhile, the expectation of a subsequent easing in the domestic supply side still existed. However, there were fewer new export orders in the market recently, and domestic demand gradually weakened. Under the influence of these fundamental factors, SHFE zinc prices continued to decline. As of 15:00 this Thursday, SHFE zinc closed at 22,340 yuan/mt, up 115 yuan/mt or 0.52%.
![Monthly Production Declined: Refined Zinc Faces Dual Pressure from Raw Material Supply and Costs [SMM Analysis]](https://imgqn.smm.cn/usercenter/qdibi20251217171755.jpg)
