Bulls Exit, Zinc Prices Retreat After Rapid Rise [SMM Morning Meeting Minutes]

Minutes of the Zinc Morning Meeting on May 27

Futures: Overnight, LME zinc opened at $3,559/mt. At the beginning of the session, bulls increased open interest, pushing LME zinc to fluctuate upward, touching a high of $3,598/mt during European trading hours. Subsequently, bulls took profits and exited, causing LME zinc to decline in a stepwise manner, probing a low of $3,523.5/mt near the end of the session, ultimately closing down at $3,528/mt, down $16.5/mt or 0.47%. Trading volume increased to 11,918 lots, and open interest decreased by 1,610 lots to 231,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 25,065 yuan/mt. At the beginning of the session, SHFE zinc dipped lower, with the center shifting below the daily moving average. Toward the end of the session, the center declined further, probing a low of 24,745 yuan/mt, ultimately closing down at 24,805 yuan/mt, down 180 yuan/mt or 0.72%. Trading volume decreased to 71,095 lots, and open interest decreased by 1,909 lots to 112,000 lots.

Macro: Sources: Unfreezing Iran's overseas funds remained the main point of divergence in Iran-US negotiations; Iranian Foreign Ministry: The US openly violated the ceasefire agreement, and Iran will respond; Middle Eastern officials: Despite the attack on Iran, the diplomatic process will continue; Israeli forces launched a ground offensive in southern Lebanon; Uzbekistan fully resumed gold exports in April; In April, mobile phone shipments in the Chinese market increased 2.8% YoY.

Spot market:

Shanghai: The refined zinc purchase sentiment in Shanghai was 1.88, and the shipments sentiment was 2.52. Zinc prices fluctuated at highs during the morning session. Traders' offers remained firm yesterday, and spot premiums held steady. However, downstream enterprises remained wary of high prices. Spot transactions remained poor yesterday, and overall market trading was sluggish.

Guangdong: The refined zinc purchase sentiment in Guangdong was 1.64, and the sales sentiment was 2.48. Zinc prices fluctuated at highs, and downstream purchasing enthusiasm was low. Market transactions were mostly driven by rigid demand. However, traders' offers in the current spot market remained relatively high, and spot premiums remained relatively firm.

Tianjin: The refined zinc purchase sentiment in Tianjin was 1.73, and the shipments sentiment was 2.41. Zinc prices continued to fluctuate at highs. Downstream consumption remained poor, with only small volumes of restocking driven by rigid demand. Overall purchase willingness was low. Traders' shipment premiums remained slightly stable, and overall market transactions were moderate.

Ningbo: Some downstream enterprises in Ningbo had already purchased the day before yesterday. Yesterday, market purchases decreased MoM. Traders faced sluggish shipments, but overall spot offers remained firm. Yesterday, zinc ingot spot premiums showed little change compared to the previous day.

Social inventory: On May 26, LME zinc inventory decreased by 1,075 mt to 109,950 mt, down 0.97%. According to SMM communications, as of May 25, domestic inventory increased by 2,500 mt to 265,000 mt.

Zinc Price Forecast: Overnight, LME zinc recorded a long upper shadow bearish candlestick, with the upper Bollinger Bands forming resistance above. Overnight, LME zinc retreated after a rapid rise. On the macro front, renewed tensions in the Middle East intensified inflation concerns, and bulls exited the market, dragging zinc prices lower. Overnight, SHFE zinc stopped rising and started to fall, with the KDJ indicator diverging downward. Social inventory stayed high amid weak consumption, and zinc prices pulled back after surging, with the SHFE zinc center slightly declining.

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.