US August Non-Farm Payrolls Far Exceed Expectations, LME Zinc Rises [SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes for September 4

Futures: Last Friday, LME zinc opened at $3,903/mt, consolidating briefly in early trading and dipping to a low of $3,902.5/mt. Subsequently, bulls added positions, rapidly driving LME zinc higher, with the night session touching a high of $3,957/mt. Gains narrowed toward the close, and it ultimately settled up at $3,940.5/mt, up $43/mt, or 1.10%. Trading volume fell to 13,878 lots, while open interest increased by 2,884 lots to 265,000 lots. Last Friday, the most-traded SHFE zinc 2610 contract opened at 26,710 yuan/mt, briefly dipped in early trading to a low of 26,675 yuan/mt, then bulls added positions, rapidly driving SHFE zinc higher, touching a high of 27,040 yuan/mt near the close, and ultimately settled up at 27,005 yuan/mt, up 260 yuan/mt, or 0.97%. Trading volume fell to 87,928 lots, while open interest increased by 1,009 lots to 158,000 lots.

Macro: US August nonfarm payrolls far exceeded expectations, yet Trump ramped up pressure on the US Fed to cut interest rates; US Fed's Hammack: inflation remains too high and action is needed; France's national gold reserves have all been repatriated to domestic vaults; Norway's sovereign wealth fund plans to cut US Treasury holdings by about $80 billion; the US restarted shuttle diplomacy, and Russia and Ukraine reached a "three-day ceasefire"; Iran said it will announce a "no-go zone" in the Strait of Hormuz in the coming days; the central bank will conduct 500 billion yuan in outright reverse repo operations on Monday; eight central financial enterprises plan to raise 360 billion yuan to replenish capital.

Spot:

Shanghai: Refined zinc purchase willingness in Shanghai was 1.84, and selling sentiment was 2.53. In the morning, SHFE zinc futures consolidated at highs, terminal orders at downstream enterprises remained weak, and spot transactions were largely need-based. Overall spot trading was moderate, traders sold at a relaxed pace, and spot premiums changed little.

Guangdong: Refined zinc purchase willingness in Guangdong was 1.73, and selling sentiment was 2.45. Zinc prices continued to consolidate at highs, downstream procurement was mostly just-in-time, and high prices still suppressed market demand. Last Friday, spot market transactions remained sluggish.

Tianjin: Refined zinc purchase willingness in Tianjin was 1.62, and selling sentiment was 2.41. Futures continued to consolidate at highs, with a small amount of just-in-time procurement from downstream buyers, while most downstream buyers were still waiting for suitable price levels. Trader selling premiums edged up slightly, and overall market transactions were poor last Friday.

Ningbo: Last Friday morning, zinc futures consolidated at highs. Downstream alloy plants showed low purchase willingness for inquiries, and spot transactions were basically just-in-time restocking. Overall trading was sluggish, traders sold at a relaxed pace, and spot premiums held steady from the previous day.

Inventory: On September 4, LME zinc inventory increased by 1,675 mt to 112,175 mt, up 1.52%. According to SMM communication, as of Thursday this week (September 3), total zinc ingot inventory across seven SMM regions stood at 232,800 mt, down 37,100 mt from August 27 and down 18,200 mt from August 31. Domestic inventory decreased.

Zinc price forecast: Last Friday, LME zinc recorded a large bullish candlestick. US August nonfarm payroll additions far exceeded market expectations, and the market bet that the probability of a US Fed interest rate cut in September rose to nearly 60%. However, Trump continued to pressure for rate cuts, and the US dollar shot up before pulling back. Combined with high LME position concentration, LME zinc continued to fluctuate at highs. Today, LME zinc is expected to mainly consolidate at highs. Last Friday, SHFE zinc recorded a small bullish candlestick. Although macro sentiment was volatile, China continued destocking, TCs kept falling, smelters began cutting production, and domestic destocking continued due to exports. Tight supply pushed the SHFE zinc price center higher. Today, SHFE zinc is expected to consolidate at highs.

Data source statement: Except for publicly available information, all other data are derived from public information and market communication, processed by SMM based on its internal database models, and are for reference only and do not constitute decision-making advice.