U.S.-Iran Tensions Remain Elevated, LME Zinc Under Pressure [SMM Morning Meeting Minutes]

SMM May 11 News:

Futures: Last Friday, LME zinc opened at $3,439/mt. At the beginning of the session, LME zinc fluctuated upward and touched $3,457/mt during European trading hours. Subsequently, bears increased positions, and LME zinc fluctuated downward all the way, hitting a low of $3,418/mt during the night session, finally closing down at $3,441/mt, down $6/mt, a decline of 0.17%. Trading volume increased to 10,480 lots, and open interest increased by 3,121 lots to 240,000 lots. Last Friday, the most-traded SHFE zinc 2606 contract opened at 24,205 yuan/mt. At the beginning of the session, bulls reduced positions, and SHFE zinc fluctuated downward all the way, hitting a low of 24,025 yuan/mt near the end of the session, finally closing down at 24,030 yuan/mt, down 245 yuan/mt, a decline of 1.01%. Trading volume decreased to 45,345 lots, and open interest decreased by 4,530 lots to 85,273 lots.
Macro:
Iran reportedly rejected the US proposal, and Trump said Iran's response was completely unacceptable. US April non-farm payrolls added 115,000 jobs, significantly exceeding expectations. Bessent is about to head to Japan and South Korea on Monday to attend related meetings. The UK's ruling Labour Party suffered a crushing defeat in local elections, and Prime Minister Starmer refused to resign. Russian President Putin stated that he believed the Ukraine conflict was about to end. He Lifeng will lead a delegation to South Korea this week to hold economic and trade consultations with the US side. China's fourth-generation independently developed superconducting quantum computer "Origin Wukong-180" went online.
Spot market:
Shanghai: The purchase willingness for refined zinc in the Shanghai region was 2.02, and the shipments sentiment was 2.37. There were limited shipments in the Shanghai market. Last Friday, spot premiums remained firm, but with futures staying at highs, downstream enterprises were cautious about high prices and continued to wait and see. Last Friday, spot transactions remained on an as-needed basis, and overall market trading was sluggish.
Guangdong: The purchase willingness for refined zinc in the Guangdong region was 1.71, and the sales sentiment was 2.45. Suppressed by high futures prices, downstream enterprises restocked on an as-needed basis with weak purchase willingness. Meanwhile, overall spot cargo circulation in the market was sluggish, traders quoted at high prices, and spot premiums remained relatively firm.
Tianjin: The purchase willingness for refined zinc in the Tianjin region was 1.85, and the shipments sentiment was 2.27. Last Friday, zinc prices continued to fluctuate at highs. Downstream enterprises were mainly cautious about high prices and took a wait-and-see approach. Market circulating volumes were relatively low, and traders slightly raised premiums on shipments. Overall market transactions were moderate.
Ningbo: Last Friday, market shipments remained limited, divergence in spot premiums persisted, and overall performance was firm. Downstream factories made few inquiries and purchased on an order-based basis. Last Friday, spot transactions remained moderate.
Social inventory: On May 8, LME zinc inventory increased by 16,175 mt to 110,600 mt, up 17.13%. According to SMM communications, as of May 8, China's inventory decreased.
Zinc Price Forecast: Last Friday, LME zinc recorded a small bullish candlestick. The strong US April non-farm payrolls data increased the US Fed's confidence in maintaining interest rates unchanged. US-Iran tensions remained elevated, putting non-ferrous metals under pressure. Combined with large volumes shipped to LME delivery warehouses, the LME zinc center continued to move lower, and LME zinc is expected to be in the doldrums today. Last Friday, SHFE zinc recorded a large bearish candlestick. Macro sentiment weakened, putting non-ferrous metals under pressure, and SHFE zinc declined. However, China's ore supply remained relatively tight, and zinc concentrate TCs fell to historical lows, providing support at the bottom for SHFE zinc. SHFE zinc is expected to be in the doldrums today.

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