High capital concentration, LME zinc records four-day winning streak [SMM Morning Meeting Summary]

SMM Zinc Morning Briefing, September 8

Futures: Overnight, LME zinc opened at $3,987/mt. In early trading, bulls added positions and LME zinc rose all the way, touching a high of $4,035/mt during European trading hours. Profit-taking then followed, and LME zinc quickly pulled back to a low of $3,972/mt. Near the close, the price center shifted higher, and LME zinc settled up at $4,021/mt, up $31.5/mt, or 0.79%. Trading volume increased to 14,081 lots, and open interest rose by 544 lots to 263,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened at 27,420 yuan/mt. In early trading, SHFE zinc consolidated along the daily average line, briefly dipping to a low of 27,360 yuan/mt. Bears then reduced positions, and the SHFE zinc center moved higher, touching a high of 27,545 yuan/mt near the close. SHFE zinc settled up at 27,530 yuan/mt, up 25 yuan/mt, or 0.09%. Trading volume fell to 70,835 lots, and open interest dropped by 1,919 lots to 158,000 lots.

Macro: Zimbabwe announced an immediate ban on antimony and tungsten exports; Bessent on the yen: If you want to fight me, bring it on; Russia-US presidential phone call focused on resolving the Ukraine issue; Iranian military warned of attacks on tankers at Kuwaiti and Bahraini ports; Houthi forces launched large-scale attacks on Saudi military and oil facilities; US media: Iranian attack on US warship may escalate the conflict.

Spot:

Shanghai: Refined zinc purchasing sentiment in Shanghai was 1.74, and selling sentiment was 2.50. In the morning, SHFE zinc futures prices rose again to hit a yearly high. Downstream users showed strong fear of high prices, and with no clear improvement in end-user orders, they continued to hold off on purchases yesterday. Traders in the market were also indifferent about selling, leaving overall spot market trading sluggish.

Guangdong: Refined zinc purchasing sentiment in Guangdong was 1.55, and selling sentiment was 2.26. In the morning, futures prices broke above 27,700 yuan/mt. Market trading was thin, downstream users were clearly wary of high prices, and traders' willingness to sell weakened due to the high prices. Spot transactions were poor.

Tianjin: Refined zinc purchasing sentiment in Tianjin was 1.51, and selling sentiment was 2.31. Futures shot up to a yearly high. Downstream users did not purchase zinc ingot, and traders were less willing to sell given the excessively high futures prices. Overall, there was almost no trading in the market yesterday.

Ningbo: Futures zinc prices shot up to a yearly high. Downstream enterprises showed strong fear of high prices, and with some raw material inventory already on hand, they continued to hold off on purchasing yesterday. The overall spot market was sluggish.

Inventory: On September 8, LME zinc inventory increased by 2,275 mt to 115,375 mt, up 2.01%. According to SMM communication, as of Monday this week (September 7), total zinc ingot inventory across SMM's seven locations stood at 222,100 mt, down 28,900 mt from August 31 and down 10,700 mt from September 3. China's inventory decreased.

Zinc price forecast: Overnight, LME zinc posted a four-day winning streak. Geopolitical tensions flared up again, energy prices rose, and inflation expectations heated up. Combined with still-high capital concentration in LME, the LME zinc center shifted higher. LME zinc is expected to consolidate at highs today. Overnight, SHFE zinc recorded a small bullish candlestick. Macro sentiment was mixed. From a fundamental perspective, supply is tight, while the market still holds some expectations for the September-October peak season. Boosted by LME, SHFE zinc continued to move higher. SHFE zinc is expected to consolidate at highs today.

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 and do not constitute decision-making advice.