SMM Zinc Morning Meeting Summary on April 28
Futures Market: On Friday, LME zinc opened at $2,705.5/mt. At the start of the session, bears increased their positions, pushing LME zinc briefly higher to $2,710/mt. Subsequently, LME zinc fluctuated downward throughout the session, dipping to a low of $2,642/mt by the close. It eventually closed at $2,645.5/mt, down $59.5/mt or 2.2% from the previous close. Trading volume increased to 10,898 lots, while open interest rose by 1,055 lots to 205,000 lots. On the same day, the most-traded SHFE zinc 2506 contract opened at 22,630 yuan/mt. At the start of the session, bulls reduced their positions, causing SHFE zinc to briefly dip to 22,525 yuan/mt. It then oscillated around the daily average line, with fluctuations of less than 100 yuan. It eventually closed at 22,550 yuan/mt, down 200 yuan/mt or 0.88% from the previous close. Trading volume decreased to 61,118 lots, while open interest increased by 2,803 lots to 120,000 lots.
Macro: Trump stated that a trade agreement would be announced within the next three to four weeks. US Secretary of State Rubio said that the US would not expand sanctions against Russia. The third round of indirect talks between the US and Iran concluded with both sides still holding differences. Hamas expressed willingness to release all Israeli hostages in exchange for a five-year ceasefire. The "Fed Whisperer" noted that the market had overinterpreted Harker's remarks about a potential June interest rate cut. Trump hinted at supporting a ban on stock trading by US Congress members. The Iranian port affected by the explosion has resumed cargo import and export operations. The Ministry of Foreign Affairs stated that China and the US had not held consultations or negotiations on tariff issues. Hainan Province and 15 cities (regions) will establish comprehensive pilot zones for cross-border e-commerce. Six departments issued a document to optimize the tax refund policy for departing travelers, lowering the threshold for tax refunds.
Spot Market:
Shanghai: In the morning session, the market offered premiums of 0-20 yuan/mt against the average price, with fewer quotes against the futures market. Recently, some traders have been pre-selling imported zinc ingots at low prices, squeezing the transactions of domestically produced zinc ingots. Coupled with the significant rise in the futures market, downstream sentiment remained cautious. On Friday, purchase willingness was low. To facilitate sales, traders adjusted spot premiums downward on a MoM basis, but overall trading activity remained sluggish.
Guangdong: Premiums against Shanghai spot were 60 yuan/mt, with the Shanghai-Guangdong price spread widening. On Friday, the futures market continued to rise, dampening downstream procurement demand. Some traders in the market had relatively low spot inventories, keeping spot premiums and discounts at high levels and suppressing market trading activity. Meanwhile, the price spread between futures contracts narrowed on Friday, causing spot premiums and discounts to decline.
Tianjin: Tianjin reported premiums of around 80 yuan/mt against Shanghai. The futures market continued to fluctuate at highs, with low downstream procurement enthusiasm and a wait-and-see attitude towards prices. Arrivals in Tianjin gradually eased, and sentiment for stockpiling ahead of the Labor Day holiday was low. Traders continued to adjust premiums and discounts downward, with premiums declining and overall trading activity poor.
Ningbo: Quotes against Shanghai spot were on par. On Friday, traders in the Ningbo market adopted a laid-back approach to selling, with spot premiums maintaining a fluctuating trend. However, some downstream players who had previously purchased imported zinc ingots received shipments recently, holding a certain level of raw material inventory. Additionally, with the futures market rising, inquiries and purchase activity were generally moderate on Friday.
Social Inventory: On April 25, LME zinc inventory decreased by 2,250 mt to 180,050 mt, a decline of 1.23%. According to SMM communications, as of April 24, the total zinc ingot inventory across seven locations tracked by SMM was 85,800 mt, a decrease of 14,200 mt from April 17 and 7,200 mt from April 21, indicating a decline in domestic inventory.
Zinc Price Outlook: On Friday, LME zinc recorded a large bearish candlestick, with the 5/10-day moving averages providing support below and the middle Bollinger Band forming resistance above. Driven by hopes of easing global trade tensions, the US dollar index rose, pushing the center of LME zinc prices downward. On Friday, SHFE zinc recorded a small bearish candlestick. According to SMM, zinc concentrate TCs for May increased by 50 yuan/mt (metal content), with the rate of increase slowing. However, consumption support gradually weakened, and SHFE zinc prices were mainly in the doldrums. It is expected that zinc prices will continue to fluctuate.
