Macro Headwinds Largely Released, LME Zinc Rebounds from Lows [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, September 18

Futures: Overnight, LME zinc opened at $3,799/mt, then rose all the way, dipped to $3,777/mt in early trading, hit a high of $3,903.5/mt near the end of the session, and finally closed up at $3,881.5/mt, up $71/mt, or 1.86%. Trading volume increased to 14,030 lots, and open interest fell by 5,079 lots to 262,000 lots. Overnight, the most-traded SHFE zinc 2611 contract opened at 26,500 yuan/mt, then continued to consolidate at highs, hit a high of 26,680 yuan/mt in early trading, dipped to 26,480 yuan/mt during the session, and finally closed up at 26,590 yuan/mt, up 310 yuan/mt, or 1.18%. Trading volume increased to 74,263 lots, and open interest rose by 3,522 lots to 127,000 lots.

Macro: The Bank of England held rates steady for the sixth consecutive meeting and announced the cancellation of its long-term gilt sale plan. US media reported that the US Department of Defense is considering withdrawing nearly one-third of US troops from Europe. Saudi Arabia reportedly asked Oman to mediate and reached a two-week ceasefire with the Houthis. Trump will meet with Gulf state leaders during the UN General Assembly and allow an Iranian delegation to attend. The Ministry of Commerce said China and US economic and trade teams are maintaining close communication on issues such as tariff reductions.

Spot market:

Shanghai: Yesterday, refined zinc purchase sentiment in Shanghai was 2.06, and selling sentiment was 2.58. The circulation of zinc ingots in the Shanghai market remained limited yesterday, and traders held prices firm. Spot premiums continued to rise yesterday, with most trading taking place among traders, while downstream purchase willingness was average. SHFE zinc prices consolidated, and spot transactions were largely need-based.

Guangdong: Yesterday, refined zinc purchase sentiment in Guangdong was 1.99, and selling sentiment was 2.6. Zinc price centers edged down yesterday, and downstream purchases increased. With the holiday approaching, some end-users began phased stockpiling at lower prices, and concerns about a potential rebound in zinc prices also supported higher premiums.

Tianjin: Yesterday, refined zinc purchase sentiment in Tianjin was 1.98, and selling sentiment was 2.41. Futures pulled back slightly yesterday, and some downstream enterprises stockpiled at lower prices, with increased pricing activity. Traders held prices firm, and premiums edged up slightly, improving overall market trading sentiment.

Ningbo: Yesterday, traders in the Ningbo market showed strong willingness to hold prices firm, and spot premiums were raised noticeably. However, zinc futures consolidated, and terminal orders at downstream enterprises showed no clear improvement. Spot transactions were largely need-based yesterday.

Social inventory: On September 17, LME zinc inventory increased by 1,575 mt to 114,250 mt, up 1.4%. According to SMM communication, as of September 17, domestic inventory edged down.

Zinc price forecast: Overnight, LME zinc recorded a bullish candlestick, with the 10-day moving average above forming resistance. The rate hike has landed, and macro sentiment has been largely released. On the fundamentals side, although LME zinc ingot inventory accumulated, it remains at a relatively low level, and the LME zinc backwardation structure is still high. LME zinc rebounded from lows and is expected to maintain a fluctuating trend in the short term. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average below providing support. Boosted by the stronger LME, SHFE zinc also rose in the night session. Moreover, with the National Day holiday approaching, downstream enterprises in China have been actively stockpiling recently, and China's zinc ingot inventory has been destocking accordingly, supporting the upward shift of SHFE zinc's center.

Data source statement: Except for public 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, not constituting decision-making advice.