No Clear Signal of Middle East Conflict Ending, Zinc Price Center Shifts Downward [SMM Morning Meeting Minutes]

Zinc Morning Meeting Summary on May 28

Futures: Overnight, LME zinc opened at $3,535/mt. In the early session, it traded around the daily moving average. During European trading hours, it attempted to break downward, but bulls bought on dips, pushing LME zinc up to a high of $3,565.5/mt. Subsequently, bulls took profits and exited, sending LME zinc on a downward path. Near the close, the center moved down to around $3,510/mt for consolidation, and it eventually closed down at $3,507.5/mt, a decline of $20.5/mt or 0.58%. Trading volume decreased to 8,593 lots, and open interest decreased by 573 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,700 yuan/mt. During the session, SHFE zinc consolidated around the daily moving average, attempting to break downward to a low of 24,590 yuan/mt, then the center returned to near the daily moving average. It eventually closed down at 24,715 yuan/mt, a decline of 120 yuan/mt or 0.48%. Trading volume decreased to 62,919 lots, and open interest decreased by 1,862 lots to 110,000 lots.

Macro: Trump warned ally Oman: misbehaving will get you blown up; Trump said the US is not yet satisfied with the agreement reached with Iran; the White House official account "Rapid Response 47": the contents of the memorandum of understanding released by Iranian media are entirely fabricated; Israel Defense Forces: multiple explosive drones attacked northern Israel; National Bureau of Statistics (NBS): from January to April, total profits of industrial enterprises above designated size nationwide increased 18.2% YoY.

Spot market:

Shanghai: In the Shanghai region, the purchase sentiment for refined zinc was 1.9, and the shipment sentiment was 2.54. There were many traders shipping in the Shanghai market. Yesterday, spot premiums of zinc ingot showed little change, and zinc futures prices maintained a fluctuating trend. Downstream enterprises of zinc in east China had low purchase willingness, overall consumption performance was weak, and spot transactions were slightly sluggish.

Guangdong: In the Guangdong region, the purchase sentiment for refined zinc was 1.7, and the sales sentiment was 2.4. Yesterday, although the zinc price center edged down slightly, futures still hovered at highs. Downstream had strong fear of high prices, coupled with end-use consumption entering the off-season, enterprises lacked motivation to purchase, and spot premiums edged down.

Tianjin: In the Tianjin region, the purchase sentiment for refined zinc was 1.75, and the shipment sentiment was 2.43. Zinc prices continued to fluctuate at highs, downstream consumption remained poor, with small amounts of just-in-need restocking dominating, and a wait-and-see attitude was still maintained. Trader shipment premiums remained slightly stable, with overall market transactions being average.

Ningbo: Market traders offered shipments in a laid-back manner. Yesterday, Ningbo spot premiums showed little change. Downstream alloy plants basically purchased on an as-needed basis, with some plants having purchased earlier and continuing to wait and see yesterday. Overall spot transactions saw no improvement.

Social inventory: On May 27, LME zinc inventory decreased by 1,550 mt to 108,400 mt, a decline of 1.41%. According to SMM communications, as of May 25, domestic inventory increased by 2,500 mt to 265,000 mt.

Zinc price forecast: LME zinc recorded a bearish candlestick overnight, with the daily candlestick center shifting downward. With no clear signal of an end to the Middle East conflict, coupled with expectations of monetary tightening policies, the center of LME zinc shifted downward. SHFE zinc recorded a small bullish candlestick overnight, with the middle Bollinger Bands providing support below, while MACD turned to bearish candlestick. Overnight macro sentiment weakened, and non-ferrous metals declined broadly, but zinc's price decline was relatively limited due to strong support from the supply side.

Data source disclaimer: Data other than public 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.