LME Zinc Ingot Inventory Continued to Decline, Daytime Zinc Prices Surged [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, April 22

Futures: Overnight, LME zinc opened at $3,414/mt. After the opening, LME zinc dipped slightly, touching a low of $3,387.5/mt before rising quickly, reaching an intraday high of $3,454.5/mt. LME zinc then fluctuated at highs and pulled back, ultimately closing higher at $3,437/mt, up $23/mt or 0.67%. Trading volume increased to 11,244 lots, and open interest decreased by 1,178 lots to 225,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened at 24,290 yuan/mt. At the start of the session, SHFE zinc touched a high of 24,300 yuan/mt, then fluctuated downward throughout the session, reaching an intraday low of 24,105 yuan/mt. SHFE zinc subsequently maintained a fluctuating trend, ultimately closing higher at 24,180 yuan/mt, up 65 yuan/mt or 0.27%. Trading volume increased to 42,286 lots, and open interest increased by 3,028 lots to 87,324 lots.

Macro: Trump announced on local time Tuesday an extension of the ceasefire deadline, maintaining the naval blockade and awaiting Iran's submission of a unified negotiation proposal. Iranian media responded that Iran had not requested an extension of the ceasefire deadline. Iran ultimately decided not to participate in the US-Iran negotiations on the 22nd. US media reported that Vance canceled his trip to Pakistan. Fed Chairman nominee Warsh stated that the US Fed needs to develop a new framework to address inflation. Trump said he would be disappointed if the new Fed Chairman does not cut interest rates, and expressed surprise at the US stock market rebound during the Iran conflict. The State Council issued the "Opinions on Promoting the Expansion and Quality Improvement of the Service Industry," calling for moderately ahead-of-schedule construction of mobile IoT. MIIT announced support for forward-looking research on space computing power technology and systematic planning for R&D of frontier technologies such as 6G and next-generation internet.

Spot market:

Shanghai: Yesterday, the purchasing sentiment for refined zinc in the Shanghai area was 2.05, and the shipments sentiment was 2.71. Yesterday morning, futures zinc prices fluctuated. Shanghai traders had strong sentiment to hold prices firm, and spot premiums in the market edged higher. However, downstream buyers remained cautious amid high prices and continued to wait and see. Few inquiries and purchases were made yesterday, and overall trading activity was mainly among traders.

Guangdong: Yesterday, the purchasing sentiment for refined zinc in the Guangdong area was 1.74, and the sales sentiment was 2.64. Although the zinc price center shifted downward yesterday, it did not reach downstream buyers' psychological price levels. Market transactions remained lackluster. Some traders quoted higher prices but found it difficult to close deals, and slightly lowered spot premiums to facilitate shipments.

Tianjin: Yesterday, the purchasing sentiment for refined zinc in the Tianjin area was 1.73, and the shipments sentiment was 2.49. Zinc prices continued to fluctuate at highs yesterday. Although they pulled back slightly, they did not reach downstream buyers' psychological price levels. Downstream purchasing enthusiasm was low, and trading was mainly among traders. With the spot export window open, traders had a mentality to hold prices firm when shipping. Overall market transactions were lackluster.

Ningbo: Recently, few traders were making shipments in the Ningbo market. Yesterday, spot premiums remained firm, basically stable compared to the previous day. Downstream enterprise orders were mediocre, and spot purchases yesterday were still driven by rigid demand, with market trading activity remaining subdued.

Social inventory: On April 20, LME zinc inventory decreased by 3,475 mt to 107,525 mt, down 3.13%. According to SMM communications, as of April 20, China's inventory saw a cumulative increase.

Zinc price forecast: Overnight, LME zinc posted a bullish candlestick, with the upper Bollinger Bands rail forming resistance. Although on the macro front the prospects for US-Iran peace talks remained unclear and the US dollar index rebounded, LME zinc ingot inventory continued to decline, hitting a one-month low. Bears reduced their positions, and intraday LME zinc prices rallied, with the LME zinc price center shifting higher MoM. Overnight, SHFE zinc posted a bearish candlestick, with the 10-day moving average providing support below. Boosted by LME trends, SHFE zinc opened higher with a gap in the night session. However, on the China fundamentals side, the tight ore and loose ingot situation persisted, and macro trends remained unclear, with SHFE zinc continuing to hover at highs.

Data source disclaimer: Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.