April 2 Zinc Morning Meeting Summary
Futures: Overnight, LME zinc opened at $3,233/mt. In early trading, LME zinc extended its decline along the daily average line, touching a low of $3,193.5/mt during European trading hours. Subsequently, as bears reduced positions and exited, LME zinc climbed all the way up, with the center moving up to around $3,290/mt near the close, and finally closed higher at $3,283.5/mt, up $69.5/mt, or 2.16%. Trading volume increased to 15,440 lots, while open interest decreased by 205 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened at 23,635 yuan/mt. In early trading, after fluctuating around the daily average line, SHFE zinc was pushed higher all the way by increased long positions, touching a high of 23,935 yuan/mt near the close, and finally closed higher at 23,895 yuan/mt, up 300 yuan/mt, or 1.27%. Trading volume decreased to 60,197 lots, while open interest increased by 941 lots to 89,872 lots.
Macro: The Middle East’s largest aluminum producer shut down a smelter due to an Iranian attack; US media: the US military seeks expanded access rights to military bases in Greenland; the US ADP employment data showed steady growth in US private-sector employment in March; Trump said the president of Iran’s new regime requested a ceasefire, which Iran denied; US media: Trump is expected to announce that the war is about to end, with full responsibility for the strait lying with NATO; airlines will raise fuel surcharges on China domestic routes starting April 5.
Spot Market:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.08, and shipments sentiment was 2.68. Although zinc prices on the futures continued to fluctuate at highs, traders in the Shanghai market continued to hold prices firm, and spot premiums kept rising. Downstream enterprises purchased based on orders, with limited overall inquiries and purchases, and spot transactions were sluggish.
Guangdong: Refined zinc purchase sentiment in Guangdong was 2.02, and sales sentiment was 2.83. The Guangdong market was sluggish yesterday. Current prices have moved above the downstream psychological price level, while enterprises had already stockpiled a certain amount of inventory at lower prices earlier. In addition, the price spread between futures contracts widened yesterday, and spot premiums fell.
Tianjin: Refined zinc purchase sentiment in Tianjin was 1.85, and shipments sentiment was 2.43. Zinc prices continued to fluctuate at highs yesterday, while downstream zinc ingot inventory remained high. There was still no stockpiling sentiment ahead of the Qingming Festival, and purchase willingness was not strong. Market trading was mainly among traders, trader spot premiums for shipments remained basically stable with a slight firm tone, and overall market transactions were average.
Ningbo: At the initial stage of long-term contracts, there were not many traders making shipments in the Ningbo market yesterday. Market spot premiums continued to rise, but downstream enterprise orders were average, and some enterprises had sufficient raw material inventory, resulting in poor spot transactions yesterday.
Social Inventory: As of April 1, LME zinc inventory decreased by 275 mt to 114,225 mt, down 0.24%; according to SMM, as of March 30, China inventory continued to decline.
Zinc Price Outlook: Overnight, LME zinc posted a four-day winning streak, with the center of the daily candlestick moving higher. Trump released a TACO signal, expectations for an end to the geopolitical conflict in the Middle East increased, the US dollar index fell, and nonferrous metals saw bargain hunting. Zinc inventory remained at low levels, and bears exiting their positions helped drive zinc prices higher throughout the session. Attention should be paid to Trump's remarks today. Overnight, SHFE zinc posted a small bullish candlestick, with the center of the daily candlestick moving higher again, while the middle Bollinger Bands formed resistance above. Overnight, amid expectations that the geopolitical conflict may come to an end, China followed outside China in seeing its center move higher. However, judging from current spot trading, as zinc prices rose, downstream pricing activity weakened. Coupled with frequent macro changes, it was not advisable to chase further gains in zinc prices excessively ahead of the holiday, and a wait-and-see approach was recommended.
Data Source Statement: Except for public information, all other data was processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.
