SMM Zinc Morning Meeting Minutes, September 4
Futures: Overnight, LME zinc opened at $3,880/mt, briefly pulled back in early trading before quickly rising to $3,915/mt, then drifted lower to hit a low of $3,845.5/mt. In the night session, it rebounded from the low and finally closed at $3,897.5/mt, up $20/mt, or 0.52%. Trading volume decreased to 15,156 lots, and open interest increased by 2,024 lots to 262,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened at 26,725 yuan/mt, then drifted higher to touch a high of 26,830 yuan/mt, before retreating after the rapid rise to hit a low of 26,635 yuan/mt, and finally closed at 26,705 yuan/mt, up 95 yuan/mt, or 0.36%. Trading volume decreased to 63,503 lots, and open interest fell by 580 lots to 159,000 lots.
Macro: US media: Oman rejected Iran's proposal to charge fees for passage through the Strait of Hormuz; Iran struck US military bases in the UAE and Kuwait; Trump said US ammunition stockpiles are nearly unlimited and capacity is unprecedented; US Fed Governor Waller said if August inflation comes in higher than expected, he would consider a rate hike, while if it improves, he would lean toward keeping rates unchanged; US PMI data showed economic growth rebounded in Q3.
Shanghai: Yesterday, refined zinc purchase sentiment in Shanghai was 1.78, and selling sentiment was 2.59. In the morning, SHFE zinc futures prices rebounded again, intensifying downstream enterprises' fear of high prices. Coupled with the fact that terminal orders have yet to show a trend of improvement, downstream purchasing and inquiry enthusiasm was poor yesterday. The overall spot market was sluggish, and traders took a laid-back approach to selling.
Guangdong: Yesterday, refined zinc purchase sentiment in Guangdong was 1.6, and selling sentiment was 2.4. Zinc prices continued to rise yesterday. Although traders offered quotes, actual market transactions were difficult. Downstream fear of high prices was prominent, and terminal orders were also scarce at high prices, leaving the spot market quiet.
Tianjin: Yesterday, refined zinc purchase sentiment in Tianjin was 1.64, and selling sentiment was 2.43. Futures rebounded, and downstream remained on the sidelines, making only small just-in-time purchases. Zinc ingot exports from Tianjin increased, inventory declined, and spot premiums on trader shipments edged up slightly. Overall market transactions were poor yesterday.
Ningbo: Yesterday morning, zinc futures prices rebounded MoM. Downstream fear of high prices persisted, and downstream enterprises continued to wait and see, showing almost no willingness to inquire or purchase. Traders took a laid-back approach to selling, spot premiums changed little, and overall trading was sluggish.
Inventory: On September 3, LME zinc inventory increased by 9,975 mt to 110,500 mt, up 9.92%. According to SMM communication, as of Thursday this week (September 3), total zinc ingot inventory across seven SMM locations was 232,800 mt, down 37,100 mt from August 27 and down 18,200 mt from August 31. Domestic inventory decreased.
Zinc price outlook: Overnight, LME zinc formed a bullish candlestick with a long lower shadow. LME zinc inventory surged by 9,975 mt in a single day to 110,500 mt, cooling expectations of tight supply and dragging LME zinc lower initially. However, a weaker US dollar index, combined with further downward revisions in market rate hike expectations, helped LME zinc recover from lows. Overnight, SHFE zinc formed a small bearish candlestick. LME zinc's rebound from lows lifted the center of SHFE zinc prices. Tight domestic ore supply, low TCs, and social inventory drawdowns continued to provide support; however, high prices suppressed downstream purchasing, and futures gains narrowed. The market is expected to continue to consolidate at highs during the day.
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