Strong US dollar, LME zinc under pressure [SMM Morning Meeting Minutes]

SMM February 27:

Futures: Overnight, LME zinc opened at $3,388/mt. At the beginning of the session, bulls and bears were intertwined, and LME zinc briefly rose to a high of $3,398.5/mt. Subsequently, bears increased their positions, and the center of LME zinc moved downward, touching a low of $3,338/mt during European trading hours. Later, LME zinc fluctuated and finally closed down at $3,366.5/mt, down $20.5/mt, a decrease of 0.61%. Trading volume increased to 9,909 lots, and open interest increased by 616 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,525 yuan/mt. At the beginning of the session, SHFE zinc fluctuated downward all the way to a low of 24,470 yuan/mt. Later, bears increased their positions, and SHFE zinc fluctuated upward, touching a high of 24,625 yuan/mt towards the end of the session. It finally closed flat at 24,570 yuan/mt. Trading volume decreased to 43,454 lots, and open interest increased by 205 lots to 92,967 lots.
Macro:
Iran's foreign minister said negotiations made good progress; US 30-year mortgage rates fell below 6% for the first time since 2022; India relaxed the investment scope of active equity funds, allowing more funds to be allocated to gold and silver; The Ministry of Commerce responded to the upcoming sixth round of China-US economic and trade consultations.

Spot market:
Shanghai: The purchase willingness for refined zinc in the Shanghai area was 1.84, and the shipment willingness was 2.47. As zinc ingots in transit arrived successively, zinc ingot inventory in the Shanghai market continued to accumulate. The market had ample zinc ingot supply. However, it was understood that not many downstream enterprises had resumed production, and some already resumed enterprises reported that pre-holiday inventory had not been fully digested, resulting in low purchase willingness for zinc ingots. Overall market trading performance was sluggish.

Guangdong: The purchase willingness for refined zinc in the Guangdong area was 1.64, and the sales willingness was 2.03. Overall, yesterday, the zinc price center moved downward. Although spot supply in the market was relatively ample, downstream enterprises were in the process of gradually resuming production. End-user purchase demand was weak, spot transactions remained relatively ordinary, and spot premiums/discounts continued to decline.

Tianjin: The purchase willingness for refined zinc in the Tianjin area was 1.62, and the shipment willingness was 1.91. Yesterday, the zinc price was mainly volatile. Downstream enterprises were still gradually resuming work, with few spot purchases and cargo pick-ups. Traders' shipment premiums held steady with a slight increase, the market was sluggish, and overall transactions were few.

Ningbo: The market continued to wait for downstream enterprises to resume production. Yesterday, overall market transactions showed no significant improvement. Some traders slightly lowered their spot quotations to facilitate shipments, and overall premiums were in the doldrums.
Social inventory: On February 26, LME zinc inventory decreased by 1,425 mt to 98,400 mt, a decrease of 1.43%. According to SMM communication, as of February 26, domestic inventory increased.
Zinc price forecast: Overnight, LME zinc recorded a small bearish candlestick. Amid tariff chaos and the advancement of US-Iran negotiations, the US dollar remained strong, non-ferrous metals were under pressure, and the center of LME zinc moved downward. LME zinc is expected to fluctuate today. Overnight, SHFE zinc recorded a small bullish candlestick. The market focused on the uncertainty of tariff policies, while domestically, it was still in the post-holiday recovery stage. Domestic inventory accumulated, and SHFE zinc mainly fluctuated.

Data source statement: Except for public information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.