Review of Zinc Market During Labour Day Holiday in 2025 and Outlook After the Holiday [SMM Analysis]

SMM May 5 Report:

Holiday Trend Review:

During the domestic Labour Day holiday, LME zinc exhibited a slight rebound from a low position. The daily moving averages above continued to suppress the daily candlestick of LME zinc. After opening, LME zinc maintained a fluctuating trend, reaching a low of $2,571/mt before rising steadily. The overall center of gravity rebounded somewhat. By the close on Friday, LME zinc closed up at $2,615/mt, up $34.5/mt from before the holiday. Trading volume decreased to 8,838 lots during the holiday, while open interest increased to 209,000 lots. LME zinc inventory stood at 173,800 mt, down 1,475 mt from 175,275 mt before the holiday, a decrease of 0.84%, with the main decline coming from Singapore warehouses. Overall, several data points were released abroad during the holiday. The US Q1 GDP growth slowed, mainly due to the impact of "front-loading" exports influenced by tariff policies. The US non-farm payrolls in April exceeded previous market expectations, indicating that the US labour market remained stable in the short term. Additionally, the US recently expressed willingness to negotiate on Sino-US tariffs, but no actual progress has been made so far. The overall market sentiment remains cautious, with zinc prices continuing to fluctuate.

Post-Holiday Outlook:

From a macro perspective, the market is still waiting for the results of the Sino-US tariff negotiations, closely monitoring subsequent developments and the release of relevant economic data. On the fundamentals side, from the supply perspective, with the gradual resumption of domestic zinc mine production and the rapid recovery of treatment charges (TCs) in H1, smelters have entered a profitable state. Although some smelters plan maintenance in May, others plan to increase production. SMM expects that domestic refined zinc production in May will still maintain the April level, with overall supply remaining strong. From the downstream perspective, although zinc ingot inventory continued to destock to below 80,000 mt before the holiday, with the gradual implementation of tariff policies, some enterprises reported a decline in export orders after May. The market has certain concerns about subsequent consumption, potentially weakening fundamental support for zinc prices. Attention should be paid to the performance of domestic downstream consumption and macro guidance in the future.

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