Geopolitical Turmoil Resurfaces, LME Zinc Comes Under Pressure [SMM Morning Meeting Summary]

SMM News, March 17:

Futures: Overnight, LME zinc opened at $3,297.5/mt. At the start of the session, bears increased open interest, dragging the center of LME zinc lower as it fluctuated downward throughout the session, touching a low of $3,255/mt during European trading hours. It then rebounded. Trading was suspended for about three hours due to technical issues. After reopening, LME zinc hit a high of $3,306.5/mt, before the center moved lower again, and it finally closed down at $3,279/mt, down $14.5/mt, or 0.44. Trading volume increased to 7,502 lots, and open interest rose by 2,947 lots to 218,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 23,930 yuan/mt. At the start of the session, SHFE zinc briefly rose to a high of 23,970 yuan/mt, then bulls reduced open interest, sending the center of SHFE zinc lower and leaving it in the doldrums. It touched a low of 23,820 yuan/mt during the session and finally closed down at 23,880 yuan/mt, down 25 yuan/mt, or 0.1. Trading volume fell to 29,661 lots, and open interest decreased by 531 lots to 76,786 lots.
Macro:
Trump: Once the Iran war ends, oil prices will fall rapidly like a rock; Iran's foreign minister denied recent contact with the US special envoy, saying such reports appeared to be intended only to mislead oil traders; Foreign media: The Saudi crown prince advised Trump to continue striking Iran; US Treasury Secretary: There was no intervention in the oil futures market, and oil prices may be "well below" $80 within a few months; Iranian Foreign Ministry: Ships from parties not involved in the war have already passed through the Strait of Hormuz; Trading in key LME contracts was once suspended for several hours; Li Chenggang: The Chinese and US teams reached preliminary consensus on some issues; China and the US agreed to study the establishment of a cooperation mechanism to promote bilateral trade and investment; National Bureau of Statistics (NBS): In January-February, the national economy got off to a strong start and had a good opening.
Spot Market:
Shanghai: Refined zinc purchasing sentiment in Shanghai was 2.38, and shipment sentiment was 2.64. Shanghai zinc ingot inventory continued to accumulate. During the morning session, zinc prices on futures fell below 24,000 yuan/mt, and downstream enterprises actively fixed prices on dips, though most purchases had been made earlier, with limited newly purchased volumes yesterday. Traders raised spot quotes slightly, and spot discounts in the market narrowed slightly.
Guangdong: Refined zinc purchasing sentiment in Guangdong was 2.15, and sales sentiment was 2.28. Yesterday, the center of zinc prices moved lower, and spot market trading improved. Downstream price-fixing increased, but actual shipments by traders were limited. Combined with yesterday's change in the price spread between futures contracts, spot premiums were flat from last Friday.
Tianjin: Refined zinc purchasing sentiment in Tianjin was 2.43, and shipment sentiment was 2.71. Yesterday, zinc prices pulled back to a level that was more acceptable to downstream enterprises. Restocking and price-fixing on dips increased among downstream buyers. Transactions for mill-delivered cargoes were relatively good, but transactions for zinc ingots via self pick-up from warehouse were relatively average. Traders' shipment premiums rose slightly, and overall market transactions improved WoW.
Ningbo: Zinc prices on the futures market fell in the morning session, and downstream enterprises made purchases and fixed prices on dips, but some downstream enterprises remained bearish and maintained some wait-and-see sentiment. Yesterday, spot market transactions improved somewhat, and spot discounts narrowed accordingly.
Social inventory: As of March 13, LME zinc inventory fell by 400 mt to 97,500 mt, a decrease of 0.41%; according to SMM communication, as of March 16, inventory in China increased.
Zinc Price Outlook: Overnight, LME zinc posted a small bearish candlestick. Geopolitical issues continued to cause significant disruption, and the market still maintained a wait-and-see attitude. Expectations for interest rate cuts remained weak, and the US dollar continued to weigh on base metals performance. The center of LME zinc edged lower, and it is expected to fluctuate mainly today. Overnight, SHFE zinc posted a small bearish candlestick. Macro sentiment was weak, zinc ingot inventory in China continued to build up to a high level in recent years, supply pressure remained heavy, and the recovery in consumption fell short of expectations. The center of SHFE zinc moved lower, and SHFE zinc is expected to trade in a fluctuating range today.

Data Source Disclaimer: Except for publicly available information, all other data was processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.