Social inventory destocking significantly boosts sentiment; SHFE zinc consolidates on a strong note [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes, September 1

Futures: Yesterday, LME was closed due to the UK Summer Bank Holiday. Overnight, the SHFE zinc 2610 contract opened at 26,660 yuan/mt, hitting its intraday low right at the open, then drifted higher to touch 27,035 yuan/mt before closing at 26,950 yuan/mt, up 240 yuan/mt, or 0.90%. Trading volume fell to 85,705 lots, while open interest increased by 5,442 lots to 171,000 lots.

Macro: Trump: Will strike Iran hard; Iranian President's Office: Confirmed to the Pakistani Prime Minister that if the US fulfills its commitments, Iran is ready to implement the memorandum of understanding; According to US media: Trump and his aides have been considering limited strikes against Iran; Trump: Interest rates are too high, respects Warsh, he will do what he must do; US Treasury Secretary Bessent: Will advance fiscal consolidation with Vought, the only way to reduce debt is through economic growth.

Shanghai: Yesterday, the purchase willingness for refined zinc in Shanghai was 1.84, and the selling sentiment was 2.58. In the morning, SHFE zinc futures prices stayed high. Downstream enterprises reported that end-use consumption orders still showed no significant improvement. Yesterday, downstream enterprises mostly remained on the sidelines, with overall weak inquiry and purchase willingness. However, traders in the market generally held prices firm, and spot premiums edged up accordingly.

Guangdong: Yesterday, the purchase willingness for refined zinc in Guangdong was 1.95, and the selling sentiment was 2.42. In early trading yesterday, zinc prices moved lower, and downstream enterprises engaged in some price fixing. Meanwhile, driven by exports, inventory in Guangdong declined notably. Coupled with relatively tight spot circulation for some brands, spot premiums moved higher.

Tianjin: Yesterday, the purchase willingness for refined zinc in Tianjin was 1.69, and the selling sentiment was 2.38. Futures stayed high, and downstream users were cautious about buying at elevated prices, with a strong wait-and-see sentiment. Large plants awaited deliveries under long-term contracts, while traders sold during the contract rollover with spot premiums edging up slightly. Overall market transactions were relatively weak yesterday.

Ningbo: Yesterday morning, zinc futures consolidated. Downstream plants in Ningbo mostly remained on the sidelines, with overall lukewarm inquiry and purchasing activity. Traders quoted prices in a laid-back manner, and overall transactions showed no improvement.

Inventory: On August 28, LME zinc inventory increased by 75 mt to 97,950 mt, up 0.08%. According to SMM communication, as of Monday this week (August 31), total zinc ingot inventory across seven SMM locations stood at 251,000 mt, down 17,300 mt from August 24 and down 18,900 mt from August 27. Domestic inventory decreased.

Zinc Price Outlook: Overnight, LME zinc was closed, and SHFE zinc posted a bullish candlestick. The notable destocking of domestic zinc ingot social inventory boosted market sentiment, and increased bullish positioning pushed the SHFE zinc price center higher. Zinc prices are expected to consolidate on a strong note during the day.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only, not constituting decision-making advice.