The Trump 2.0 Era: How Will Zinc Prices Perform? [SMM Analysis]

SMM, Nov 14: On the afternoon of November 6, the US presidential election concluded. Due to Trump's victory, his anticipated immigration, tax, and trade policies are expected to stimulate higher US growth and inflation. The US dollar index surged to a nearly four-month high, causing LME zinc to fall by 4.65%, which in turn briefly weakened SHFE zinc.

However, on November 7, SHFE zinc prices rose, shifting to anticipation of favorable domestic policies. The rise in ferrous metals prices also supported SHFE zinc. What will be the future trend of zinc prices?

Fundamentals:
Supply tightness persisted throughout the year, with a continuous tight ore supply. Entering the fourth quarter winter stockpiling season, smelters' demand increased. Considering the pressure on ore supply and smelting losses, November production is expected to decrease slightly MoM, continuing the supply tightness and providing some support for zinc prices.

On the demand side, the off-season is approaching. In November, frequent environmental protection warnings in many northern regions, combined with colder weather, limited project construction. Many projects are considering wrapping up, leading to weaker orders. Additionally, due to fewer orders, competition among downstream enterprises is fierce, making it difficult to raise processing fees. This results in downstream sectors being less receptive to higher zinc prices, with weak demand continuing to suppress further zinc price increases.

The National People's Congress Standing Committee meeting concluded on November 8 without releasing unexpectedly favorable policies, leading to a shift in macro sentiment. Zinc prices are expected to continue fluctuating at high levels.