LME Inventory Remains Low, LME Zinc Continues to Consolidate at Highs [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Briefing for August 12

Futures: Overnight, LME zinc opened at $3,737/mt, initially drifted lower to a low of $3,708.5/mt, then stopped falling and rebounded to a high of $3,752/mt, before narrowing gains in late trading to finally close at $3,734.5/mt, down $1/mt or 0.03%. Trading volume fell to 10,410 lots, and open interest increased by 2,790 lots to 250,000 lots. The most-traded SHFE zinc 2609 contract opened at 25,700 yuan/mt, shot up to 25,740 yuan/mt early on, then pulled back to a low of 25,560 yuan/mt, before finally closing at 25,590 yuan/mt, down 75 yuan/mt or 0.29%. Trading volume fell to 35,618 lots, and open interest decreased by 949 lots to 114,000 lots.
Macro: Trump: Iran likes to play tricks, saying one thing to our face and another behind our back; Iran's Supreme National Security Council: as long as the US does not accept Iran's conditions, the strait will not open; Pakistan: the US and Iran are close to reaching an arrangement; CME Group's 24-hour silver trading will launch on September 11; CME Group, in partnership with Silicon Data, will launch computing power futures in October.
Spot:
Shanghai: Refined zinc procurement sentiment in Shanghai was 1.86, and shipment sentiment was 2.58. SHFE zinc futures consolidated at highs yesterday, with downstream enterprises remaining cautious amid high prices and watching from the sidelines. Coupled with poor off-season orders, overall inquiry activity was weak yesterday, and traders struggled to sell. Overall spot trades remained sluggish.
Guangdong: Refined zinc procurement sentiment in Guangdong was 1.95, and sales sentiment was 2.57. Zinc prices moved sideways at high levels, with overall market trading atmosphere mediocre. Recently, spot supplies of some brands remained tight, supporting firm spot quotes. Downstream enterprises mostly made just-in-time procurement, and some plants were affected by high finished-product inventories, leading to lackluster procurement enthusiasm.
Tianjin: Refined zinc procurement sentiment in Tianjin was 1.79, and shipment sentiment was 2.48. Futures remained consolidated at highs, downstream buyers were cautious of high prices and refrained from purchases, and large mills relied mainly on long-term contracts. Although exports drove some destocking, zinc ingot inventory in Tianjin remained relatively high. Traders' premiums were largely stable, and overall market transactions were mediocre yesterday.
Ningbo: SHFE zinc futures consolidated in the morning. Although some downstream plants resumed production after the typhoon, overall end-user orders were poor. Most downstream enterprises opted to wait and see yesterday, and spot trades showed no improvement MoM.
Inventory: On August 11, LME zinc inventory decreased by 50 mt to 97,075 mt, down 0.05%. According to SMM communication, as of Monday, August 10, total zinc ingot inventory across seven regions tracked by SMM stood at 267,400 mt, down 5,100 mt from August 3, and down 4,300 mt from August 6. Domestic inventory declined.
Zinc price forecast: Overnight LME zinc recorded a small bearish candlestick. US-Iran tensions fluctuated, and the US dollar consolidated, but low LME inventory lent support to LME zinc, which consolidated at highs. LME zinc is expected to mainly consolidate at highs today. Overnight SHFE zinc recorded a small bearish candlestick. China’s ore remained relatively tight, while zinc ingot inventory destocking driven by exports lent support to SHFE zinc. However, consumption remained weak, capping upside for SHFE zinc. SHFE zinc is expected to consolidate at highs today.

Data source statement: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM’s internal database models, for reference only and do not constitute any investment advice.