Macro Environment Improves, Zinc Prices Maintain Fluctuating Trend [[SMM Market Review - Weekly Price Review]]

LME Zinc: At the beginning of the week, LME zinc trading was suspended for one day due to the holiday. Subsequently, the final reading of the US S&P Global Services PMI for April came in at 50.8, falling short of the previous reading and expectations. Market risk aversion sentiment was strong, and LME zinc prices edged slightly higher. Then, Trump indicated that a major announcement would be made before his trip to the Middle East, the content of which may not necessarily involve trade matters. Meanwhile, if subsequent tariff negotiations fail, the EU will impose tariffs on a large number of US goods. The international trade situation was fraught with uncertainty, and market concerns grew, leading to a decline in LME zinc prices. However, the subsequently released US trade deficit for March widened to a record $140.5 billion, and the US dollar index continued to decline. At a domestic meeting, People's Bank of China Governor Pan Gongsheng announced RRR cuts and interest rate cuts. Under the influence of the release of favourable macro front news in China and the decline in the US dollar index, LME zinc prices rose accordingly. Then, the US Fed continued to hold off on interest rate cuts, and Powell reiterated his willingness to wait for a clearer outlook before taking action. The US dollar index continued to strengthen, and LME zinc prices declined. Subsequently, Trump hinted at a major trade announcement to be made on Thursday, indicating another sign of easing in the tariff war, and LME zinc prices edged slightly higher. As of 15:00 on Thursday this week, LME zinc closed at $2,601/mt, down $14/mt or 0.54%.

SHFE Zinc: At the beginning of the week, SHFE zinc trading was suspended for one day due to the domestic Labour Day holiday. Subsequently, affected by tariff factors, uncertainty in international trade persisted, and market concerns remained strong, leading to a decline in SHFE zinc prices. Then, according to communication with SMM, social inventory after the holiday was recorded at 84,100 mt. Although there was a slight inventory buildup, the overall level remained relatively low, providing some support for SHFE zinc. Meanwhile, domestic end-use consumption was gradually entering the off-season, and SHFE zinc maintained a fluctuating trend under multiple influences. Subsequently, the State Council Information Office of China held a press conference, where People's Bank of China Governor Pan Gongsheng announced RRR cuts and interest rate cuts, as well as a reduction in the interest rate on personal housing provident fund loans. The domestic macro front was once again favourable, driving SHFE zinc prices higher. However, the US Fed continued to hold off on interest rate cuts, and the US dollar index continued to rise, leading to a decline in SHFE zinc prices driven by the LME market. Then, as scheduled, Trump announced a major trade announcement, and the trade war continued to move towards easing, driving SHFE zinc prices higher. Subsequently, SHFE zinc prices dropped back slightly. As of 15:00 on Thursday this week, SHFE zinc closed at 22,175 yuan/mt, down 265 yuan/mt or 1.18%.

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