Futures: Overnight, LME zinc opened at $3,884/mt. In early trading, LME zinc consolidated near the daily moving average, hitting a low of $3,872/mt during the session. Entering the European trading session, bulls added positions, and LME zinc shot up to touch a high of $3,949.5/mt. During the night session, LME zinc pulled back from highs, giving back most of its gains, with prices retreating to near the daily moving average. It finally closed up at $3,885.5/mt, up $1/mt, a gain of 0.03%. Trading volume increased to 20,972 lots, and open interest rose by 1,640 lots to 265,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened higher with a gap at 26,455 yuan/mt. After opening, the contract consolidated near the daily moving average, during which it touched a high of 26,560 yuan/mt. During the session, bulls reduced positions, causing prices to pull back somewhat and hit a low of 26,415 yuan/mt. It finally closed up at 26,430 yuan/mt, up 190 yuan/mt, up 0.72%. Trading volume decreased to 103,000 lots, and open interest increased by 8,033 lots to 170,000 lots.
Macro: US July PCE remained sticky, and market expectations for a US Fed rate hike next month firmed slightly; Iran said it had reached an agreement with Oman on revenue sharing in the Strait of Hormuz; an Iranian source said: Iran and Oman have yet to finalise the Strait of Hormuz agreement; a person familiar with the matter said: Russia is prepared to escalate strikes on Ukraine, believing that peace talks have hit a dead end; Nvidia’s CFO expected during the earnings call that revenue in FY2028 would increase by approximately 70%.
Spot:
Shanghai: Yesterday, the purchase sentiment for refined zinc in Shanghai was 1.88, and the shipment sentiment was 2.64. In the morning, SHFE zinc futures continued to climb above 26,000 yuan/mt, intensifying downstream enterprises’ fear of high prices. The spot market was filled with wait-and-see sentiment yesterday, and traders were equally passive in offering quotes. Spot premiums changed little compared with the previous day, and overall spot trading sentiment was sluggish.
Guangdong: Yesterday, the purchase sentiment for refined zinc in Guangdong was 1.71, and the selling sentiment was 2.50. Futures prices fluctuated above 26,000 yuan/mt, and the notable price rise led to few purchases by downstream enterprises. However, the spot circulation of some delivery brands in Guangdong had reduced recently, and coupled with the sustained opening of the zinc ingot export window, traders offered higher quotes, providing some support at the bottom for premiums. Tianjin: Yesterday, the purchase sentiment for refined zinc in Tianjin was 1.71, and the shipment sentiment was 2.42. Futures continued to rally, and downstream buyers found the prices relatively unacceptable, with almost no inquiries and mainly drawing down inventories. Traders were not active in selling, with premiums holding steady. Overall market trading was sluggish yesterday.
Ningbo: Zinc ingots under long-term contracts arrived successively, and market supply of zinc ingots was ample. However, in the morning, SHFE zinc futures continued to move higher. Downstream enterprises, fearing high prices, kept watching, with poor inquiry and purchase willingness. Spot trades were sluggish.
Inventories: On August 26, LME zinc inventory increased by 2,275 mt to 93,300 mt, up 2.39%. According to SMM communication, as of August 24, China’s inventory decreased by 2,100 mt to 268,300 mt.
Zinc Price Outlook: Overnight, LME zinc recorded a bullish candlestick with a long upper shadow, with various moving averages below providing support. Recently, LME inventory has increased, but most of it flowed into Hong Kong warehouses, leaving the overall inventory level still below 100,000 mt. The low inventory level and regional zinc ingot supply mismatch provided support for the zinc price rise, and bulls added positions to drive prices higher. However, last night, the US July PCE came in slightly above expectations, causing market expectations for a Fed rate hike next month to edge up. LME zinc recorded an inverted “V” reversal pattern. It is expected to continue to consolidate on a strong note today. Overnight, SHFE zinc recorded a small bearish candlestick, with various moving averages below providing support. The LME rally pushed the SHFE zinc center higher. Although China’s consumption performance was mediocre, it is currently largely influenced by external market movements. SHFE zinc is expected to continue to hold up well during the day.
Data Source Disclaimer: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM’s internal database models. They are for reference only and do not constitute any investment advice.
