Expectations for US Fed Interest Rate Cuts Heat Up, LME Zinc Center Shifts Upward [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes on April 25

Futures market: Overnight, LME zinc opened at $2,639/mt. After opening, it fluctuated rangebound around the daily average line, hitting a low of $2,639/mt, then started to fluctuate upward, reaching a high of $2,709.5/mt near the end of the session, and finally closed up at $2,705/mt, up $69.5/mt, a gain of 2.64%. Trading volume decreased to 10,223 lots, and open interest increased by 2,458 lots to 204,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened at 22,630 yuan/mt. After opening, it briefly fluctuated, hitting a low of 22,550 yuan/mt, then rose all the way, reaching a high of 22,910 yuan/mt near the end of the session, and finally closed up at 22,865 yuan/mt, up 275 yuan/mt, a gain of 1.22%. Trading volume increased to 106,000 lots, and open interest increased by 2,269 lots to 127,000 lots.

Macro: CCTV: US media reports that Trump is considering a tiered tariff plan for China; US Fed's Harker: If economic data becomes clear, an interest rate cut may occur in June; Trump issues an ultimatum to Russia and Ukraine, urging Putin to stop attacks on Ukraine; "Trump 2028" hats and T-shirts are on sale at Trump Group's online store; Ministry of Foreign Affairs and Ministry of Commerce: Currently, there are no economic and trade negotiations between China and the US; The central bank will conduct a 600 billion yuan 1-year MLF operation on April 25.

Spot market:

Shanghai: Yesterday, Kirin zinc ingots arrived in the Shanghai market, but the volume was limited. The number of traders selling in the market remained low, and with tight supply, spot premiums continued to rise. However, with futures still at highs, downstream sentiment was cautious, and just-in-time procurement led to sluggish trading.

Guangdong: Quoted at parity with Shanghai spot. Overall, some traders in Guangdong had limited spot supply, and premiums for some brands were high. Yesterday, futures fluctuated, and market trading atmosphere was moderate.

Tianjin: Quoted at a premium of around 70 yuan/mt compared to Shanghai. Futures continued to fluctuate at highs, downstream procurement enthusiasm was low, and most held a wait-and-see attitude towards prices. Arrivals in Tianjin gradually eased, and traders continuously lowered premiums and discounts to sell, leading to a decline in premiums and overall poor trading.

Ningbo: Quoted at parity with Shanghai spot. Zinc ingots in the Ningbo trading market remained scarce, and traders' spot premiums stayed high. However, with futures persistently at highs, downstream buying sentiment was dampened. Coupled with some downstream companies receiving deliveries and imported zinc ingots, spot trading performance was moderate yesterday.

Social inventory: On April 24, LME zinc inventory decreased by 2,725 mt to 182,300 mt, a drop of 1.47%. According to SMM communication, as of April 24, the total zinc ingot inventory in SMM's seven regions was 85,800 mt, down 14,200 mt from April 17 and down 7,200 mt from April 21, recording a decrease in domestic inventory.

Zinc price forecast: Overnight, LME zinc recorded a bullish candlestick, supported by the 10-day moving average. US Fed's remarks increased market expectations for an interest rate cut, the US dollar index weakened, and LME inventory continued to decline, pushing LME zinc's center higher. Overnight, SHFE zinc recorded a bullish candlestick, supported by the 5-day moving average. On Thursday, SMM zinc inventory decreased by 7,200 mt MoM to 85,800 mt. Zinc ingot destocking continued before the holiday, and low inventory continued to support zinc prices. During the night session, SHFE zinc continued to rise.