Futures: Overnight, LME zinc opened at $3,334/mt, with its center quickly rising at the beginning of the session, reaching a high of $3,369/mt. During the European trading session, long position liquidation pressured LME zinc to fall rapidly to a low of $3,280/mt. After entering the night session, LME zinc gradually recovered its losses, rebounding above the daily average line, and finally closed up at $3,323/mt, up $4.5/mt, a gain of 0.14%. Trading volume decreased to 89,821 lots, and open interest fell by 3,230 lots to 233,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 24,800 yuan/mt. It quickly climbed to 24,885 yuan/mt at the start, then fluctuated downward to a low of 24,720 yuan/mt as bears increased positions. However, as bears reduced positions, SHFE zinc gradually recovered its losses, rising above the daily average line, and finally closed down at 24,805 yuan/mt, down 155 yuan/mt, a loss of 0.62%. Trading volume decreased to 106,000 lots, while open interest increased by 1,441 lots to 83,734 lots.
Macro: Trump signed a bill to end a partial government shutdown; US Fed Governor Milan: interest rate cuts slightly more than one percentage point are needed this year; White House: talks between the US and Iran are still planned for this week, and the US retains military options; Iranian diplomatic source: Iran has entered the highest level of defensive readiness; RBA raised interest rates by 25 basis points to 3.85%; Central Document No. 1 "The State Council's Opinions on Anchoring Agricultural and Rural Modernization and Solidly Promoting Comprehensive Rural Revitalization" was released; Domestic exchanges intensively adjusted margins and price limits for some futures contracts; Domestic refined oil retail prices rose for the second time this year.
Spot:
Shanghai: In Shanghai, purchase willingness for refined zinc was 1.92, and selling willingness was 2.64. On the previous afternoon, zinc futures prices fell sharply, prompting downstream enterprises to actively fix prices at lows. Yesterday morning, as futures prices rebounded, downstream players mostly adopted a wait-and-see attitude. Coupled with enterprises gradually going on holiday, overall spot trades were moderate, with spot premiums/discounts operating at low levels.
Guangdong: In Guangdong, purchase willingness for refined zinc was 1.9, and selling willingness was 2.45. Yesterday, as the zinc price center rose and some end-users had already made purchases the previous day, spot market trades weakened, and spot premiums/discounts declined.
Tianjin: In Tianjin, purchase willingness for refined zinc was 1.91, and selling willingness was 2.23. Zinc prices continued to fluctuate at highs. Due to the significant pullback in zinc prices the previous day, downstream players mostly restocked at lows. Yesterday, as futures rebounded, downstream inquiries were scarce, and trades were sluggish. Traders' selling prices for spot cargo were largely stable, and overall market trades turned quieter compared to the previous day.
Ningbo: Traders actively offered spot cargo, and spot discounts continued to widen. However, as downstream enterprises had actively fixed prices the previous day and zinc ingot stockpiling was largely completed, purchase willingness was poor yesterday, and spot trades were sluggish.
Inventory: On February 3, LME zinc inventory decreased by 125 mt to 108,975 mt, down 0.11%. According to SMM communication, as of this Monday (February 2), domestic zinc ingot inventory increased.
Zinc Price Forecast: LME zinc recorded a bearish candlestick overnight, with support from the 20-day and 60-day daily averages below. The US government shutdown ended, easing market uncertainty, but some US Fed officials maintained strong dovish tones, while international geopolitical risks persisted, causing LME zinc to fluctuate considerably. SHFE zinc recorded a small doji overnight, facing resistance from the 5-day and 10-day daily averages above and support from the 20-day and 60-day daily averages below. The current fundamentals are mixed, with domestic mine TC operating at low levels, end-use consumption gradually turning mediocre, and macro disturbances remaining, keeping SHFE zinc in a fluctuating trend at highs.
Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not intended as decision-making advice.
