[notes of SMM Zinc Internal Morning meeting]

SMM7 22 July news:

Zinc Morning meeting: macro: Xinhua said on Friday that Chinese companies had made inquiries about the purchase of US agricultural products, which Hu Xijin, editor-in-chief of the Global Times, said showed that US-China trade talks would resume soon. The initial value of the University of Michigan's consumer confidence index rose slightly to 98.4 in July from 98.2 in June, close to its best level in more than a decade, and the financial situation is expected to be the best since 2004. 460 billion yuan of reverse buyback funds will expire this week and 502 billion yuan of MLF funds will expire on Tuesday; as a result, 962 billion yuan will expire this week.

Fundamentals: last Friday's spot review:

Shanghai: period zinc high stable operation, early market leader single transaction maintained normal, net average price transaction is relatively positive, rising sticker water quoted 70 yuan / ton shipment, the market 60 yuan / ton delivery willingness is strong, there are transactions in different markets, but the source of low price goods is relatively tight. Entering the second trading period, the willingness of the market to receive goods is still strong, because the warehouse transfer problem is still shadowy, the market circulation is not significantly loose, the source of low-priced goods is difficult to find, the market transaction price remains stable at about 70 yuan / ton, and some of the high-hanging sources are traded at about 60 yuan / ton, but the downstream procurement continues to be weak, and the overall transaction is warmer than yesterday, mainly contributed by traders.

Guangdong: refineries actively ship goods, the market supply of goods is abundant. The holder early quotation is more unified, concentrated in the average price-10 yuan / ton or so, the market transaction continuation is weak, enters the second trading period, some holders intend to receive the goods at the discount of 70 yuan / ton to the 09 contract, while the shipper focuses on the shipment near the discount of 60-50 yuan / ton to the 09 contract, and the willingness to receive and ship is quite different, and the market transaction is deadlocked. Overall, downstream early replenishment bank overdraft follow-up consumption, trading between traders is still divided, today's Guangdong market transactions again lighter than yesterday.

Tianjin: the disk is rising, the refinery is actively shipping, and the market supply is abundant. In the morning, the holders concentrated their quotations around 50 to 70 yuan / ton for the 08 contract, and the downstream continued their wait-and-see attitude yesterday. There was no obvious willingness to receive the goods as a whole. Some of the subsequent holders downgraded the rising water to around 20 to 60 yuan per ton for the 08 contract, resulting in a small amount of market transactions. Overall, today's Tianjin market continues the trend of priceless, downstream hope to fall stronger, in addition to rigid demand to buy outside the weekend reserve demand, the overall transaction situation is again lighter than yesterday.

Stocks: as of July 19, social zinc stocks in the three places were down 1000 tons from July 12 and from July 8 to 145500 tons. Into the July consumption off-season, inventory is still not tired. SMM learned that the recent warehouse inventory is less, inventory has not increased. SMM believes that the main reason why the market is not cumbersome is that there are not many goods delivered at the end of the supply side. On the one hand, the northern refineries have entered the maintenance stage one after another in July and August, and the increase in output is relatively limited compared with the previous month. And the pre-source of goods sent to the market warehouse, factory inventory to the warehouse more, and still have to ensure direct shipment to the next shipment. As a result, refineries have a limited supply of goods to the warehouse in the near future, and the pace of delivery may slow down; on the other hand, there are fewer imports in the near future. Finally, for the consumer side, the short-term at the regular off-season level, compared with the same period last year, the situation is still to be considered. The overall inventory is still not exhausted, the market needs to continue to pay attention. SMM believes that soon to enter the end of July and early August, a small number of large plant maintenance recovery, then may begin to accumulate, but the amount of accumulation is still limited in the short term.

Bonded area inventory: according to SMM research, the inventory of zinc ingots in Shanghai Free Trade Zone was 91200 tons on July 19, 700 tons more than last Friday. This week, the transfer of LME zinc structure to contango did not open the zinc ingot import window, and the active foreign trade market continued to be in the doldrums.

Zinc prices: last Friday, Lun Zinc recorded two consecutive negative, overseas markets returned to the contango structure, supply-side contradictions were basically alleviated, short into the market every high selling pressure, dragged back all last week's gains. Last Friday, Shanghai zinc closed negative, under the shadow line under the 5-day moving average support, above the 40-day moving average suppression strength is stronger, Shanghai zinc setback fell back to the platform arrangement, the domestic inventory decline is relatively small, the market for the subsequent supply recovery is still expected to be strong, within the day or run near the 20-day moving average.

Forecast today: expected to run in the range of 2400-2450 US dollars / ton, Shanghai Zinc main 1909 contract or operation in the vicinity of 19150-19650 yuan / ton. Material 0 # domestic fall 200