Dovish Remarks From the US Fed Drove Zinc Prices Higher [SMM Morning Meeting Summary]

March 31 Zinc Morning Meeting Summary

Futures: Overnight, LME zinc opened at $3,107/mt. After briefly consolidating around the daily average at the beginning of the session, bears reduced open interest and exited, driving LME zinc all the way higher. It traded above the daily average, touched a high of $3,192/mt near the close, and finally closed up at $3,182/mt, up $75.5/mt, or 2.43%. Trading volume increased to 11,831 lots, and open interest decreased by 142 lots to 209,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened at 23,625 yuan/mt. After briefly consolidating around the daily average at the beginning of the session, its center moved lower and touched a low of 23,515 yuan/mt. Later, as bears exited, the center of SHFE zinc moved back above the daily average, and it finally closed up at 23,650 yuan/mt, up 230 yuan/mt, or 0.98%. Trading volume decreased to 39,180 lots, and open interest decreased by 1,143 lots to 96,212 lots.

Macro: Zelensky said Ukraine was ready for an Easter ceasefire; the Council of the European Union extended its sanctions mechanism against Iran; during Powell's remarks, the market withdrew its bets on interest rate hikes; Iran's parliament approved transit fees for the strait; Trump said the response to Iran's attack on Israeli refineries would come "very soon"; Trump said that if negotiations broke down, he would destroy Iran's energy and power facilities as well as Khark Island; Iran refused to attend the Pakistan-led meeting on the war; Kuomintang Chair Zheng Liwen will lead a delegation to visit the mainland; the maiden flight of the Lijian-2 carrier rocket was a complete success.

Spot Market:

Shanghai: Refined zinc procurement sentiment in Shanghai was 2.1, and shipment sentiment was 2.6. Zinc prices on the futures market rose significantly in the morning session, and some downstream enterprises continued to wait and see. Yesterday, zinc ingot procurement still followed demand, overall spot transactions were mediocre, traders were unwilling to make shipments at low prices, and spot premiums in the market remained relatively firm.

Guangdong: Refined zinc procurement sentiment in Guangdong was 2.06, and sales sentiment was 2.7. Yesterday, zinc prices moved higher, and traders lowered premiums to make shipments, but affected by high prices, downstream buyers mostly made just-in-time procurement. Spot market transactions were relatively average, and spot premiums moved lower.

Tianjin: Refined zinc procurement sentiment in Tianjin was 1.9, and shipment sentiment was 2.37. Yesterday, zinc prices continued to fluctuate at highs, and environmental protection measures resumed in Hebei, affecting downstream operating rates. Downstream buyers were wary of high prices and purchased cautiously, mainly making just-in-time procurement. Market trading was dominated by traders, traders' shipment premiums held basically stable with a slight firm tone, and overall market transactions were poor.

Ningbo: Zinc prices on the futures market rose significantly. Yesterday, some traders in Ningbo quoted prices and made shipments in a laid-back manner, spot premiums held steady, downstream enterprises purchased cargoes based on demand, and overall trading was relatively average.

Social Inventory: As of March 30, LME zinc inventory decreased by 100 mt to 115,275 mt, down 0.09%; according to SMM, as of March 30, inventory in China continued to decline.

Zinc Price Outlook: Overnight, LME zinc posted a bullish candlestick, with the 20-day moving average above acting as resistance. Overnight, dovish remarks from the US Fed boosted market sentiment, while LME Cash-3M shifted to a backwardation structure, prompting bears to reduce positions and exit, and LME zinc held up well. Overnight, SHFE zinc recorded a sixth consecutive bullish session, with the center of the daily candlestick moving higher; the 20-day moving average below provided support, while the 40/60-day moving averages above formed resistance. Overnight, zinc prices held up well, supported by costs on the supply side, while downstream consumption continued destocking; however, macro sentiment remained choppy, and zinc prices are expected to fluctuate at highs overall.

Data Source Statement: Except for public information, all other data is 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 investment advice.