Expectations for US Fed interest rate hikes heated up, LME zinc center slightly sank [SMM Morning Meeting Summary]

June 22 Zinc Morning Meeting Minutes

Futures: Last Friday, LME zinc opened at $3,627/mt. After briefly touching a high of $3,636/mt, the center shifted lower. During European trading hours, the center fluctuated around the daily average line. Approaching the night session, LME zinc accelerated its decline, with the center moving down to around $3,560/mt for consolidation. It eventually closed at $3,555/mt, down $74.5/mt, or 2.05%. Trading volume decreased to 9,988 lots, while open interest increased by 7,801 lots to 258,000 lots. SHFE zinc was closed for the Dragon Boat Festival holiday.

Macro: The market fully priced in the US Fed's 25 bp rate hike in September; Japan's Finance Minister stated that Tokyo is prepared to take decisive action against speculative moves; Trump threatened Iran to restrain Hezbollah, or face another strike; Iran said the Strait of Hormuz remains closed, and its reopening requires two conditions to be met.

Spot Market:

Shanghai: Shanghai's refined zinc purchase sentiment was 1.96, and sales sentiment was 2.57. In the morning session, zinc futures stayed high. At the end of the week, downstream enterprises showed poor purchase willingness, and overall spot trades were sluggish. Traders quoted and sold in a casual manner, with spot premiums changing little from last Thursday.

Guangdong: Guangdong's refined zinc purchase sentiment was 1.8, and sales sentiment was 2.2. The Guangdong market saw relatively sluggish trading. Some traders suspended shipments due to delayed pre-holiday payments and financial pressure, leading to fewer market quotations. Meanwhile, prices rose MoM, and downstream purchases were cautious.

Tianjin: Tianjin's refined zinc purchase sentiment was 1.95, and sales sentiment was 2.51. Zinc prices continued to fluctuate at highs. Downstream enterprises with previously fixed prices were still gradually picking up goods, and purchase willingness was low. Traders' shipment premiums remained stable, and overall market transactions were moderate.

Ningbo: The Ningbo market had ample supply. Orders for downstream zinc enterprises were weak, and spot transaction performance was poor. Some traders continued to lower spot quotations to facilitate sales, and spot premiums edged down.

Social Inventory: On June 19, LME zinc inventory increased by 2,875 mt to 123,775 mt, up 2.38%. According to SMM's understanding through communication, as of June 18, domestic inventory increased by 2,200 mt to 268,000 mt.

Zinc Price Outlook: Last Friday, LME zinc recorded a large bearish candlestick, with support from the middle Bollinger Band below and resistance from the upper Bollinger Band above. The MACD bearish histogram expanded. Last Friday, expectations for a US Fed rate hike intensified, and the market priced in a 25 bp hike in September, causing LME zinc's center to sink slightly.

Data Source Statement: Data other than publicly available information is based on publicly available information, market communication, and SMM's internal database models, processed by SMM. It is for reference only and does not constitute decision-making advice.