LME zinc ingot inventory keeps falling, and bulls add positions, lifting LME zinc [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes, August 5

Market: Overnight, LME zinc opened at $3,642/mt, then drifted higher throughout the session. It dipped to $3,635/mt early on and touched a high of $3,684.5/mt near the end, finally closing up at $3,661/mt, gaining $27/mt, or 0.74%. Trading volume decreased to 11,194 lots, while open interest increased by 3,197 lots to 248,000 lots. Overnight, the most-traded SHFE zinc 2609 contract opened at 25,110 yuan/mt, then rose and hit a high of 25,270 yuan/mt. It then consolidated above the daily average, and edged lower near the close, dipping to 25,100 yuan/mt at the end. It closed up at 25,165 yuan/mt, up 90 yuan/mt, or 0.36%. Trading volume increased to 66,219 lots, while open interest decreased by 2,579 lots to 115,000 lots.

Macro: On Monday, Japan probably did not intervene in the forex market; US Treasury Secretary Bessent: Will take all necessary measures to support the yen; The US plans to expand the scope of metal tariffs; US Energy Secretary Wright: Jones Act waiver extension is highly likely; Syria reportedly agrees to sharply cut Russian oil imports; Saudi official denies plans to ease tensions with Houthis through back-channel diplomacy; Bessent says the Strait of Hormuz may reopen today, Iran claims it will gain full control; The US is reportedly planning to ban imports of new-type Chinese optical modules.

Spot Market:

Shanghai: Yesterday, the purchasing sentiment for refined zinc in Shanghai was 1.92, and the selling sentiment was 2.48. SHFE zinc futures fell below 25,000 yuan/mt yesterday. Some downstream enterprises made point-price purchases last night, and buying was mostly on a need-to basis yesterday. Overall spot transactions were still moderate. However, there were not many traders selling, and sentiment to hold prices firm was strong. As a result, spot premiums edged up slightly.

Guangdong: In Guangdong, the purchasing sentiment for refined zinc was 1.98, and the selling sentiment was 2.43 yesterday. The center of zinc prices pulled back, but overall prices continued to consolidate at highs. Downstream buying interest was moderate. Recently, the zinc ingot export window opened, creating some export expectations. Additionally, spot circulation for some brands tightened compared to earlier. Traders had some willingness to hold prices firm, jointly supporting a slight rise in spot premiums.

Tianjin: In Tianjin, the purchasing sentiment for refined zinc was 1.84, and the selling sentiment was 2.38 yesterday. Futures pulled back slightly but remained at high levels. Downstream buyers were cautious about high prices and made few inquiries. Traders mostly kept their selling premiums stable. Overall, market transactions were weak yesterday.

Ningbo: Yesterday morning, SHFE zinc futures stayed high. Downstream enterprises remained cautious and continued to wait on the sidelines. Overall spot transactions were relatively weak, but traders continued to hold prices firm, and spot premiums in the Ningbo market edged up slightly.

Social Inventory: On August 3, LME zinc inventory decreased by 1,175 mt to 98,650 mt, a drop of 1.18%. According to SMM’s market communication, as of August 3, China’s inventory saw a slight accumulation.

Zinc Price Outlook: Overnight, LME zinc formed a bullish candlestick, with the 5-day moving average providing support from below. The US Treasury Secretary indicated that the Strait of Hormuz is expected to reopen shortly, easing inflation concerns. On the fundamentals side, LME zinc ingot inventory continued to decline, and increased bullish positioning further lifted zinc prices. The LME zinc center continued to rise and is expected to maintain the high-level trend. Overnight, SHFE zinc also formed a bullish candlestick, with the upper Bollinger Band acting as resistance. Boosted by the LME trend, SHFE zinc continued to climb during the night session. However, domestic off-season consumption continued to weigh on zinc prices, and SHFE zinc continued to consolidate at highs. Attention is on the subsequent performance of zinc ingot exports.

Data Source Statement: Data beyond publicly available information are derived by SMM through processing based on public information, market communication, and SMM’s internal database models. They are for reference only and do not constitute decision-making advice.