Ongoing Middle East Tensions, LME Zinc Trading in a Volatile Range [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, April 24

Futures: Overnight, LME zinc opened at $3,468.5/mt, touched a high of $3,474/mt at the beginning of the session, then pulled back to near the daily average line, and subsequently hovered at lows. LME zinc hit a low of $3,428.5/mt during the session, and finally closed lower at $3,454/mt, down $12.5/mt or 0.36%. Trading volume decreased to 9,295 lots, and open interest increased by 1,971 lots to 231,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened at 24,370 yuan/mt, touched a high of 24,370 yuan/mt at the beginning of the session, then quickly fell to near the daily average line, and subsequently fluctuated around the daily average line. SHFE zinc hit a low of 24,255 yuan/mt during the session, and finally closed lower at 24,315 yuan/mt, down 25 yuan/mt or 0.1%. Trading volume decreased to 35,901 lots, and open interest increased by 922 lots to 103,000 lots.

Macro: Trump stated that the military option remains on the table but nuclear weapons will not be used against Iran. The ceasefire between Israel and Lebanon will be extended by three weeks. Explosions were heard over Tehran. Israeli sources said Ghalibaf had resigned from the Iranian negotiation team. Iranian sources: Preparations for Iran-US negotiations may achieve a breakthrough "tonight or tomorrow." CME lowered margin requirements for gold and silver futures contracts. The General Office of the CPC Central Committee and the General Office of the State Council issued the Comprehensive Evaluation and Assessment Measures for Carbon Peaking and Carbon Neutrality. Vice Premier He Lifeng met with Stephen Schwarzman, Chairman and CEO of US-based Blackstone Group.

Spot market:

Shanghai: Yesterday, the purchase willingness for refined zinc in the Shanghai region was rated at 1.88, and the shipments sentiment was rated at 2.81. Yesterday morning, futures zinc prices continued to rise, and downstream enterprises in east China were mostly wary of high prices. Wait-and-see sentiment was strong yesterday, and spot trades in the market were sluggish. Traders' spot offers remained firm, and spot premiums held steady from the previous day.

Guangdong: Yesterday, the purchase willingness for refined zinc in the Guangdong region was rated at 1.7, and the sales sentiment was rated at 2.69. Yesterday, the zinc price center moved higher. Downstream enterprises had low purchase willingness, which exerted some pressure on the rise of premiums. However, as the month-end approached and invoice quotas in Guangdong tightened recently, traders' offers remained relatively firm, and spot premiums maintained a fluctuating trend.

Tianjin: Yesterday, the purchase willingness for refined zinc in the Tianjin region was rated at 1.68, and the shipments sentiment was rated at 2.43. Yesterday, zinc prices continued to rise. Under high prices, downstream enterprises had no plans for Labour Day holiday stockpiling. Traders continued to offer shipments at significant discounts, and overall market transactions were sluggish.

Ningbo: Yesterday, futures zinc prices moved higher compared with the previous day. Downstream enterprises were wary of high prices, and inquiries decreased notably. Overall market trades were sluggish. Traders mostly adopted a laid-back approach to shipment offers, and overall spot premiums remained firm.

Social inventory: On April 22, LME zinc inventory decreased by 1,550 mt to 104,300 mt, a decline of 1.46%. According to SMM market communication, as of April 21, China's inventory decreased slightly.

Zinc price forecast: Overnight, LME zinc posted a bearish candlestick, with the upper Bollinger Bands rail forming resistance. Middle East tensions persisted, and the US dollar index continued to strengthen. LME zinc pulled back in the morning session, but with continued drawdowns in LME zinc ingot inventory, the decline in zinc prices was limited, and the overall fluctuating trend was maintained. Overnight, SHFE zinc posted a bearish candlestick, with the 10-day moving average providing support below. Macro tensions persisted. On the fundamentals side, China's zinc ingot inventory levels remained high, but ore tightness had yet to ease. Amid the tug-of-war between longs and shorts, SHFE zinc hovered at highs.

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