A Zinc Smelter in Peru Closed Due to Fire, LME Zinc Recorded Eight Consecutive Gains [SMM Morning Meeting Minutes]

SMM News, May 15:

Futures: LME zinc opened overnight at $3,558.5/mt. Early in the session, LME zinc briefly dipped to a low of $3,542.5/mt before bears reduced positions, driving LME zinc to rally to a multi-year high of $3,633.5/mt. The price center then pulled back slightly, ultimately closing up at $3,587/mt, gaining $35/mt or 0.99%. Trading volume fell to 14,070 lots, and open interest decreased by 139 lots to 242,000 lots. The most-traded SHFE zinc 2606 contract opened overnight at 25,000 yuan/mt. Early in the session, bulls increased positions, and SHFE zinc briefly rose to a high of 25,075 yuan/mt before losing upward momentum, with the price center shifting lower to a low of 24,855 yuan/mt. It ultimately closed up at 24,915 yuan/mt, gaining 35 yuan/mt or 0.14%. Trading volume fell to 55,810 lots, and open interest increased by 47 lots to 89,049 lots.
Macro:
India restricted duty-free gold imports; Ukraine reported the largest Russian airstrike since the conflict began; Israel and Lebanon held a new round of negotiations in the US; Saudi Arabia was reportedly planning a Middle Eastern version of a "non-aggression pact"; Williams stated there was currently no reason to raise or cut interest rates; China's Ministry of Commerce said China was willing to work with the US, as DAS solar, to continuously expand the cooperation list; three ministries held a video conference on strengthening NEV safety management.
Spot market:
Shanghai: The purchase sentiment for refined zinc in the Shanghai region was 1.8, and the shipments sentiment was 2.63. Zinc futures prices continued to rise. Spot trades remained sluggish yesterday, with downstream enterprises continuing to stay on the sidelines. There were virtually no spot inquiries or purchases yesterday. Traders mainly focused on shipments, and spot premiums continued to decline.
Guangdong: The purchase sentiment for refined zinc in the Guangdong region was 1.45, and the sales sentiment was 2.4. Zinc prices held up well at high levels. Downstream buyers were cautious about high prices and restrained purchases. Spot trades were sluggish. Traders slightly lowered premiums to facilitate transactions, but overall transactions remained poor due to high prices, and spot premiums continued to decline.
Tianjin: The purchase sentiment for refined zinc in the Tianjin region was 1.72, and the shipments sentiment was 2.36. Zinc price center continued to move higher yesterday. Downstream consumption was relatively weak, and purchase willingness was low. Traders continued to slightly lower premiums for shipments, and overall market transactions were poor.
Ningbo: Zinc futures prices continued to rise in the morning session. Downstream alloy plants were wary of high prices and continued to stay on the sidelines today. Overall purchase willingness was poor, and spot trades were sluggish overall. Traders slightly lowered spot quotes to facilitate shipments.
Social inventory: On May 14, LME zinc inventory increased by 600 mt to 110,875 mt, up 0.54%. According to SMM's market communication, as of May 14, China's inventory increased.
Zinc price outlook: LME zinc posted a small bullish candlestick with a long upper shadow overnight. As surging inflation prompted the market to weigh the US Fed's interest rate path, the temporary closure of Peru's Cajamarquilla zinc smelter due to a fire continued to fuel market sentiment around tight supply and rising costs. LME zinc continued to rise, touching a multi-year high. LME zinc is expected to hold up well today. SHFE zinc posted a small bearish candlestick overnight. Market concerns over supply intensified, and driven by LME, SHFE zinc continued to rise. However, consumption remained weak, and China's inventory buildup continued, keeping pressure on SHFE zinc's upside. SHFE zinc is expected to hold up well today.

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.