SMM Zinc Morning Briefing, August 11
Futures: Overnight, LME zinc opened at $3,711/mt. In early trading, LME zinc drifted lower, hitting a low of $3,687/mt during the European session. Bears then cut positions, pushing LME zinc to drift higher and hit a high of $3,745.5/mt in the night session. It eventually closed higher at $3,735.5/mt, up $37.5/mt, or 1.01%. Trading volume fell to 11,048 lots, while open interest dropped by 6,595 lots to 247,000 lots. Overnight, the most-traded SHFE zinc 2609 contract opened at 25,555 yuan/mt. In early trading, SHFE zinc briefly dipped to a low of 25,460 yuan/mt, before bears cut positions, sending SHFE zinc higher throughout the session to hit a high of 25,700 yuan/mt near the close. It eventually ended higher at 25,650 yuan/mt, up 35 yuan/mt, or down 0.14%. Trading volume decreased to 49,734 lots, while open interest fell by 1,326 lots to 119,000 lots.
Macro: Trump demands compensation from Iran, says it will be part of future negotiations; Trump extends the Jones Act shipping waiver for 90 days, scope narrowed to energy commodities and fertilizers; US Fed’s Hammack: multiple rate hikes may be needed to curb inflation; Iran’s supreme leader announces multiple appointments, reshuffles armed forces leadership; Nvidia reportedly teams up with Wall Street giants to plan $500 billion AI infrastructure financing; Central bank: improve the modern monetary policy framework with Chinese characteristics, refine the mechanism for base money injection.
Spot:
Shanghai: The purchasing sentiment for refined zinc in Shanghai stood at 1.84, and the selling sentiment at 2.46. Yesterday, SHFE zinc futures consolidated at highs, and most downstream enterprises remained bearish on prices. Coupled with poor orders, inquiries and purchases were scarce. Additionally, the typhoon affected cargo pick-up at Shanghai warehouses, and some traders took leave. As a result, overall zinc ingot spot trades were sluggish, and spot premiums were largely unchanged.
Guangdong: The purchasing sentiment for refined zinc in Guangdong was 1.98, and the selling sentiment was 2.60. The center of zinc prices edged lower, and trading activity recovered slightly. However, due to end-use consumption still in the off-season, actual spot purchases by enterprises did not show significant improvement. Purchases were mainly for essential restocking after price pullbacks, with limited gains in overall trading volume. Yesterday, spot premiums strengthened slightly.
Tianjin: The purchasing sentiment for refined zinc in Tianjin was 1.77, and the selling sentiment was 2.43. Futures pulled back slightly, but prices remained elevated, leading downstream users to mainly purchase for essential needs. Inquiries were limited, and traders sold in a laid-back manner, with premiums largely stable. Overall market transactions were poor yesterday.
Ningbo: Due to typhoon weather, most downstream factories in Ningbo suspended operations yesterday, and downstream enterprises had hardly any inquiries or purchases. The overall spot market was sluggish, with traders quoting in a laid-back manner, and spot premiums were little changed day-on-day.
Inventory: On August 10, LME zinc inventory increased by 50 mt to 97,125 mt, an increase of 0.05%. According to SMM communication and understanding, as of Monday this week (August 10), the total zinc ingot inventory across SMM’s seven regions was 267,400 mt, down by 5,100 mt from August 3, and down by 4,300 mt from August 6, with domestic inventory decreasing.
Zinc price forecast: Overnight, LME zinc recorded a small bullish candlestick. US-Iran tensions were volatile, the US dollar consolidated, but LME inventories remained at low levels. Domestic zinc ingots shipped to LME delivery warehouses are still to have their specific volumes confirmed due to shipping schedules. LME zinc consolidated at highs. It is expected that LME zinc will mainly consolidate at highs today. Overnight, SHFE zinc recorded a small bullish candlestick. Driven by the LME, the center of SHFE zinc rose. Currently, it remains mainly driven by the LME. Domestic zinc ingot inventory destocking due to exports provided support to SHFE zinc. SHFE zinc is expected to consolidate at highs today.
Data source statement: All data other than publicly available information is processed by SMM based on public information, market communication, and SMM’s internal database model. It is for reference only and does not constitute any investment advice.
