US Treasury yield strength pressures, SHFE zinc consolidates and pulls back [SMM Morning Meeting Minutes]

Futures: Overnight LME zinc opened at $3,926.5/mt, drifted higher to touch $3,990/mt, then quickly pulled back to a low of $3,890.5/mt before closing at $3,904.5/mt, up $25/mt, or 0.64%. Trading volume increased to 22,497 lots, while open interest fell by 5,990 lots to 255,000 lots. Overnight SHFE zinc 2610 contract opened at 26,890 yuan/mt, marked its intraday high right at the open, then quickly dropped to 26,535 yuan/mt, rebounded from the low and moved sideways before closing at 26,765 yuan/mt, down 305 yuan/mt, or 1.13%. Trading volume increased to 111,000 lots, while open interest decreased by 7,320 lots to 167,000 lots.

Macro: US forces struck multiple sites at an Iranian airport and along the strait coast, with explosions also reported at the key energy hub of Assaluyeh Port; Trump: the deal reached with Iran is worthless; Iran said it used heavy missiles to strike a US military camp in Jordan, causing heavy US casualties; Iran: the current situation does not allow a return to the memorandum of understanding signed with the US, because the US violated the agreement; US Treasury Secretary: the Strait of Hormuz will see "bypass passage" within two years, and the US will continue to escalate sanctions on Iran.

Shanghai: Yesterday, refined zinc purchasing sentiment in Shanghai was 1.68, and willingness to sell was 2.46. In the morning, SHFE zinc futures prices rose significantly MoM to around 27,000 yuan/mt, intensifying downstream enterprises' fear of high prices. Yesterday there was almost no inquiry or purchase in the market, traders generally struggled to sell, spot premiums were slightly lowered, and overall spot trading sentiment was subdued.

Guangdong: Yesterday, refined zinc purchasing sentiment in Guangdong was 1.60, and selling sentiment was 2.30. Zinc price center kept rising yesterday, with futures moving above 27,000 yuan/mt. As prices climbed, fear of high prices in the market intensified, traders' willingness to sell shrank, downstream enterprises made almost no purchases, spot trades were sluggish, and overall transactions were poor.

Tianjin: Yesterday, refined zinc purchasing sentiment in Tianjin was 1.63, and willingness to sell was 2.31. Futures continued to hit a year-to-date high, downstream users were wary of high prices and cautious in purchasing, with no inquiries or cargo pick-ups. Large plants waited for long-term contract arrivals, traders also stayed on the sidelines, selling premiums held steady, and there was almost no trading in the overall market yesterday.

Ningbo: Yesterday in early trading, zinc prices rose significantly to around 27,000 yuan/mt. Downstream enterprises continued to wait and see with almost no inquiries yesterday, traders were also not active in selling, zinc ingot spot offers were made casually, and the overall spot market atmosphere was rather sluggish.

Inventory: On September 1, LME zinc inventory increased by 1,175 mt to 99,125 mt, up 1.20%; according to SMM communication, as of Monday this week (August 31), total zinc ingot inventory across SMM's seven locations was 251,000 mt, down 17,300 mt from August 24 and down 18,900 mt from August 27, with domestic inventory decreasing.

Zinc price forecast: Overnight LME zinc recorded a bearish candlestick with a long upper shadow. Global bond markets continued to sell off, the US dollar and US Treasury yields strengthened, and market concerns about inflation and interest rates staying high intensified, putting pressure on nonferrous metals. Overnight SHFE zinc recorded a bearish candlestick. LME zinc's retreat after rapid rise dragged the SHFE zinc center lower, coupled with bulls reducing positions, pushing the futures lower; subsequently, LME zinc rebounded from lows, and SHFE zinc followed to recover part of the losses.

Data source statement: All data other than public information 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.