[US Fed Rate Hike Expectations Rise, LME Zinc Plunges - SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, September 11

Futures: Overnight, LME zinc opened at $4,058/mt. In early trading, LME zinc briefly rose to a high of $4,064.5/mt, then bulls reduced positions, and LME zinc declined all the way, hitting a low of $3,851/mt near the end of the session. It finally closed down at $3,855/mt, down $209/mt, or 5.04%. Trading volume increased to 24,764 lots, and open interest fell by 3,212 lots to 261,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened at 27,080 yuan/mt. In early trading, SHFE zinc edged up to a high of 27,090 yuan/mt, then bulls reduced positions, and SHFE zinc declined all the way, hitting a low of 26,750 yuan/mt near the end of the session. It finally closed down at 26,760 yuan/mt, down 715 yuan/mt, or 2.60%. Trading volume fell to 115,000 lots, and open interest decreased by 13,251 lots to 133,000 lots.

Macro: The US Treasury's long-term bond buyback rarely failed to reach its cap target; sources said the White House's copper tariff plan has stalled; Saudi Arabia reported August crude oil production fell to its lowest level since 1990; the European Central Bank raised interest rates by 25 basis points while also raising its economic and inflation expectations; the US August PPI annual rate exceeded expectations, increasing the probability of a Fed rate hike in September; Yemen's Houthi forces seized a Red Sea coastal city and strategic locations; Iran suspended the 10% freight surcharge on foreign energy transport vessels.

Shanghai: Refined zinc purchase sentiment in Shanghai was 1.76, and sell sentiment was 2.44. Zinc ingot prices continued to rise in the morning session, and downstream fear of high prices persisted. Inquiries and purchase willingness remained poor yesterday, and overall spot trades were sluggish. Traders quoted prices in a laid-back manner, and market premiums remained weak.

Guangdong: Refined zinc purchase sentiment in Guangdong was 1.5, and sell sentiment was 2.32. Zinc prices continued to fluctuate at highs, and downstream purchase willingness was low, with most consuming inventory. Market transactions remained quiet, and although traders quoted prices, deals were difficult to close.

Tianjin: Refined zinc purchase sentiment in Tianjin was 1.52, and sell sentiment was 2.36. Zinc prices remained too high, and downstream had no purchase willingness. With futures too high, traders were not active in selling, and some traders waited for delivery. Overall, there were almost no transactions in the market yesterday.

Ningbo: Zinc prices consolidated at highs in the morning session. Downstream enterprises continued to fear high prices, and inquiries and purchases remained scarce yesterday. Some traders continued to lower spot quotes to sell, but most others quoted in a laid-back manner. There was some divergence in overall market premiums, and trading remained sluggish.

Inventory: On September 10, LME zinc inventory decreased by 4,325 mt to 111,350 mt, down 3.74%. According to SMM communication, as of Thursday this week (September 10), total zinc ingot inventory across SMM's seven major markets was 218,200 mt, down 14,600 mt from September 3 and down 3,900 mt from September 7. Domestic inventory decreased.

Zinc Price Forecast: Overnight, LME zinc recorded a large bearish candlestick. PPI rising more than expected boosted expectations for a Fed rate hike next week, the US dollar index moved higher, domestic export ship-to-delivery-warehouse expectations fermented, and combined with changes in copper tariff expectations, nonferrous metals broadly fell. LME zinc plunged, and it is expected that LME zinc will mainly consolidate today. Overnight, SHFE zinc recorded a large bearish candlestick. Macro sentiment turned bearish, and LME zinc's plunge dragged SHFE zinc lower. However, supply remains tight, limiting the downside for SHFE zinc. SHFE zinc is expected to consolidate 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.