US CPI Exceeds Expectations, LME Zinc Persistently Low [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes, November 11

Futures: Overnight, LME zinc opened at $3,745/mt, briefly surged to a high of $3,770.5/mt in early trading, then drifted lower throughout the session, hitting a low of $3,707.5/mt near the close, and finally settled down at $3,717/mt, down $27/mt, or 0.72%. Trading volume decreased to 11,483 lots, and open interest fell by 3,882 lots to 261,000 lots. Overnight, the most-traded SHFE zinc 2612 contract opened at 25,140 yuan/mt, quickly rallied in early trading to a high of 25,310 yuan/mt, then consolidated lower during the night session, hitting a low of 25,095 yuan/mt near the close, and finally settled up at 25,100 yuan/mt, up 25 yuan/mt, or 0.1%. Trading volume decreased to 80,072 lots, and open interest increased by 3,085 lots to 91,892 lots.

Macro: US October CPI came in broadly above expectations, hitting the threshold for a significant rate hike mentioned by Waller. Israeli media: Qatar said it has secured two weeks for US-Iran negotiations, aimed at delaying a US military strike on Iran. Iran said US claims about continued negotiations and the Qatar talks are all lies. Russia-US-Ukraine trilateral talks will continue on Wednesday. The US plan to launch an AI computing power futures market has hit obstacles. Alibaba: plans to spin off Pingtouge for an independent listing on the main board of the Hong Kong Stock Exchange.

Spot market:

Shanghai: Yesterday, refined zinc purchasing sentiment in Shanghai was 2.08, and selling sentiment was 2.61. Yesterday morning, futures consolidated at lows, and traders in the Shanghai market showed strong willingness to hold prices firm. They continued to raise spot quotes yesterday, driving premiums higher. However, downstream buyers had already purchased at lower prices earlier, so buying was mostly need-based, and spot trades showed mediocre performance.

Guangdong: Yesterday, refined zinc purchasing sentiment in Guangdong was 2.03, and selling sentiment was 2.63. Guangdong's inventory levels have been low recently, and some brands had limited spot availability with higher quotes, but overall market demand was relatively average. Yesterday, spot premiums edged up slightly.

Tianjin: Yesterday, refined zinc purchasing sentiment in Tianjin was 1.93, and selling sentiment was 2.51. Yesterday, the futures center pulled back, and downstream buyers made fewer point-price purchases and cargo pick-ups. Additionally, environmental protection alerts in many northern regions affected operations, so downstream buyers mostly stayed on the sidelines. As futures declined, traders raised their selling quotes accordingly, and overall market transactions were average.

Ningbo: Ningbo zinc ingot inventory continued to decline. Yesterday, market shipments remained limited, and traders continued to raise spot premium quotes. Downstream buyers purchased on a need basis, and overall transactions showed mediocre performance.

Social inventory: On November 10, LME zinc inventory decreased by 1,400 mt to 144,975 mt, down 0.96%. According to SMM communication, as of November 9, domestic inventory edged up slightly.

Zinc price forecast: Overnight, LME zinc recorded a bearish candlestick, with support from the middle Bollinger Band. US October CPI data exceeded expectations, lifting market expectations for a US Fed rate hike in December. The US dollar index strengthened, pressuring zinc prices, and LME zinc consolidated at lows. Overnight, SHFE zinc recorded a bearish candlestick, with support from the lower Bollinger Band. Influenced by LME movements, SHFE zinc also traded at lows in the night session. Although the ore supply tightness persists and the supply side still provides some support, downstream purchasing enthusiasm is weak in the off-season, and SHFE zinc is expected to remain weak.

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.