U.S.-Iran Negotiations Enter Final Stage, LME Zinc Rebounds from Lows [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, May 21

Futures: Overnight, LME zinc opened at $3,513/mt. After the open, LME zinc fluctuated upward throughout the session, touching a low of $3,499.5/mt early in the session and a high of $3,569.5/mt late in the session, ultimately closing higher at $3,567.5/mt, up $56.5/mt or 1.61%. Trading volume increased to 9,871 lots, and open interest decreased by 2,775 lots to 236,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,750 yuan/mt. After the open, SHFE zinc fluctuated higher, touching a low of 24,750 yuan/mt early in the session and a high of 24,930 yuan/mt late in the session, ultimately closing higher at 24,910 yuan/mt, up 120 yuan/mt or 0.48%. Trading volume decreased to 36,655 lots, and open interest increased by 2,294 lots.

Macro: Trump said US-Iran negotiations have entered the final stage; foreign media reported that Trump insists on a diplomatic solution to the Iran issue, while Netanyahu strongly opposes it; NVIDIA's Q1 revenue and Q2 outlook both exceeded expectations, but US stocks remained flat after hours; foreign media reported that OpenAI is expected to file its IPO application as early as Friday; SpaceX officially filed its IPO application with Q1 revenue of $4.7 billion; the Ministry of Commerce stated that China and the US agreed in principle to discuss a framework arrangement for reciprocal tariff reductions on products of equal scale under the Trade Council; the Ministry of Finance reported that securities transaction stamp tax in the first four months was up 74.8% YoY.

Spot market:

Shanghai: Yesterday, the refined zinc purchase sentiment in the Shanghai region was 2.06, and the shipments sentiment was 2.54. Yesterday, there were few traders making shipments in the Shanghai market. Some traders continued to raise spot offer prices, and spot premiums continued to rise. However, futures zinc prices maintained a fluctuating trend, and some downstream enterprises continued to hold bearish views. Yesterday, purchases were basically made on an as-needed basis, and overall spot trades were moderate.

Guangdong: Yesterday, the refined zinc purchase sentiment in the Guangdong region was 1.66, and the sales sentiment was 2.48. Yesterday, traders' offer prices remained relatively high, but downstream demand has already entered the off-season. Combined with the lack of significant fluctuations in zinc prices, overall market demand was rather ordinary. However, the ongoing impact of invoices in the current market persisted, and spot premiums continued to rise.

Tianjin: Yesterday, the refined zinc purchase sentiment in the Tianjin region was 1.82, and the shipments sentiment was 2.42. Yesterday, zinc prices mainly maintained a fluctuating trend. With the rainy season limiting end-user construction activities, galvanizing orders weakened, and downstream purchase sentiment was low. The Tianjin market had relatively ample supplies, but traders' shipment premiums remained slightly stable, and overall market transactions were still moderate.

Ningbo: Yesterday morning, futures zinc prices fluctuated. Traders' shipment offer prices in the market were flat compared to the previous day. Yesterday, spot premiums remained stable. Some downstream factories had already made purchases earlier, and yesterday mostly adopted a wait-and-see approach. Overall zinc ingot shipments were sluggish.

Social inventory: On May 19, LME zinc inventory decreased by 450 mt to 112,050 mt, a decline of 0.4%. According to SMM communication, as of May 18, China's inventory edged up.

Zinc price forecast: Overnight, LME zinc posted a bullish candlestick, with the upper Bollinger Bands forming resistance. Trump stated that negotiations with Iran had entered the final stage, and market expectations for the end of a US-Iran war heated up. The US dollar index softened, LME zinc rebounded from lows, and the center shifted slightly higher. Overnight, SHFE zinc posted a bullish candlestick, with the 5-day moving average providing support below. On the fundamentals side, the tightness in zinc concentrates continued to support zinc prices. Combined with the boost from LME trends, the SHFE zinc center shifted higher during the night session, maintaining an overall fluctuating trend at highs.

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. It is for reference only and does not constitute decision-making advice.