Weak US Dollar, Zinc Prices Rise Accordingly [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes on May 29

Futures: Overnight, LME zinc opened at $3,509.5/mt. At the beginning of the session, LME zinc fluctuated around the daily moving average. Entering the night session, LME zinc rallied significantly, with the center shifting up to around $3,555/mt, ultimately closing higher at $3,558/mt, up $50/mt, a gain of 1.44%. Trading volume increased to 10,947 lots, and open interest decreased by 2,655 lots to 227,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,725 yuan/mt. After brief consolidation at the beginning of the session, SHFE zinc rose steadily, touching a high of 24,915 yuan/mt, ultimately closing higher at 24,900 yuan/mt, up 220 yuan/mt, a gain of 0.89%. Trading volume decreased to 52,694 lots, and open interest decreased by 140 lots to 106,000 lots.

Macro: US Treasury Secretary said Trump would not accept a "bad Iran deal"; sources said Iran had not yet agreed to any memorandum of understanding; the Trump administration was preparing for the possibility of the Cuban government collapsing this summer; the US Fed's preferred PCE inflation rate strengthened, and it may continue to hold steady going forward.

Spot market:

Shanghai: The purchasing sentiment for refined zinc in the Shanghai region was 2, and the shipments sentiment was 2.58. Yesterday, there were more traders shipping out in the market. Zinc prices on futures fell in the morning, and some downstream enterprises took the opportunity to place orders at lower prices, but actual purchase volumes were limited. Spot transactions improved only marginally, and spot premiums showed little change from the previous day.

Guangdong: The purchasing sentiment for refined zinc in the Guangdong region was 1.76, and the sales sentiment was 2.43. Yesterday, zinc prices maintained a fluctuating trend. Downstream enterprises had been placing some orders since the previous afternoon, but affected by mediocre end-use consumption, actual purchasing power remained weak. Meanwhile, traders still held prices firm, and overall spot transactions were rather ordinary.

Tianjin: The purchasing sentiment for refined zinc in the Tianjin region was 1.79, and the shipments sentiment was 2.45. Zinc prices pulled back slightly, and downstream order placements increased, but there was no large-scale restocking. Downstream consumption remained poor. Traders' shipment premiums remained slightly stable, and overall market transactions were mediocre.

Ningbo: Zinc prices on futures fell in the morning. Some traders took the opportunity to slightly raise spot quotations, but downstream enterprises mostly continued to expect lower prices. Purchases yesterday were limited, and spot trades in the market showed mediocre performance.

Social inventory: On May 27, LME zinc inventory decreased by 75 mt to 108,325 mt, a decline of 0.07%. According to SMM communications, as of May 28, China's inventory decreased by 4,100 mt to 260,900 mt.

Zinc price outlook: Overnight, LME zinc posted a long lower-shadow bullish candlestick, with the middle rail of the Bollinger Bands providing support below. The US April core PCE price index annual rate rose to 3.3%, in line with market expectations. Middle East tensions showed expectations of easing, the US dollar weakened, and non-ferrous metals generally rallied during the night session, with LME zinc rising accordingly. Overnight SHFE zinc recorded a bullish candlestick, with the 20-day moving average providing support below. Overnight macro sentiment drove a broad rally in non-ferrous metals. Zinc smelter maintenance will increase in June, and production is expected to decline further. Combined with disturbances on the ore side outside China, zinc supply-side support remains strong, and buying on dips is recommended for zinc prices.

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.