New Obstacles Emerge in US-Iran Negotiations, LME Zinc Retreats from Highs [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, May 22

Futures: Overnight, LME zinc opened at $3,563/mt. After the open, LME zinc fluctuated downward throughout the session, touching a high of $3,575.5/mt early in the session and probing a low of $3,505/mt near the end of the session, ultimately closing lower at $3,542.5/mt, down $25/mt or 0.7%. Trading volume rose to 10,336 lots, and open interest decreased by 245 lots to 236,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,755 yuan/mt. After the open, SHFE zinc traded in a range below the daily average line, touching a high of 24,785 yuan/mt early in the session and probing a low of 24,610 yuan/mt during the session, ultimately closing lower at 24,665 yuan/mt, down 140 yuan/mt or 0.56%. Trading volume decreased to 31,073 lots, and open interest decreased by 1,832 lots to 94,581 lots.

Macro: Al Arabiya TV refuted Iranian media reports citing it regarding a "US-Iran deal"; Rubio: establishing a strait toll station is completely unacceptable; Iran's Revolutionary Guards: 31 ships passed through the Strait of Hormuz in the past 24 hours; senior Iranian officials refuted reports on keeping enriched uranium domestically; foreign media reported that Turkey nearly cleared its US Treasury holdings to support its currency; BOE Technology Group: as of now, the company has not yet engaged in business cooperation with NVIDIA.

Spot market:

Shanghai: Yesterday, the refined zinc purchase sentiment in the Shanghai region was 1.94, and the shipments sentiment was 2.48. Yesterday, zinc futures prices rose significantly. End-users showed strong fear of high prices, with almost no inquiries or purchases in the market. Overall spot trades were sluggish, traders offered prices passively, and spot premiums showed no notable decline.

Guangdong: Yesterday, the refined zinc purchase sentiment in the Guangdong region was 1.57, and the sales sentiment was 2.4. Yesterday, the futures price center moved higher MoM. End-users showed obvious fear of high prices. Although traders' offers remained firm, end-users had low willingness to buy, market transactions were sluggish, and spot premiums held steady.

Tianjin: Yesterday, the refined zinc purchase sentiment in the Tianjin region was 1.74, and the shipments sentiment was 2.37. Yesterday, zinc prices surged higher. Downstream orders were poor, and buyers were cautious due to fear of high prices, with low purchase sentiment. The Tianjin market had relatively ample supply, but traders' shipment premiums still held slightly steady, and overall market transactions were poor.

Ningbo: Few traders were shipping in the market. Yesterday, there was some divergence in spot price offers, but futures zinc prices moved higher MoM. Downstream alloy plants mostly stayed on the sidelines, and overall market trading activity was sluggish.

Social inventory: On May 20, LME zinc inventory decreased by 800 mt to 111,250 mt, down 0.71%. According to SMM communications, as of May 21, China's inventory declined slightly.

Zinc price outlook: Overnight, LME zinc posted a bearish candlestick, with the upper Bollinger Bands forming resistance. US-Iran negotiations encountered new obstacles, reigniting market concerns and weighing on non-ferrous metals. LME zinc retreated from highs. Overnight, SHFE zinc recorded a bearish candlestick, with the Bollinger Bands middle track providing support. Influenced by LME trends, SHFE zinc opened lower in the night session. Combined with sufficient zinc ingot supply on the fundamentals side and the gradual arrival of the off-season for consumption in China, SHFE zinc maintained a fluctuating trend.

Data Source Disclaimer: Data other than public 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.