From a macro perspective, the minutes of the Federal Reserve's interest rate meeting were released, with interest rates remaining unchanged and hinting that interest rates will not be cut soon. The market sentiment weakened, and non-ferrous metals prices declined. Fundamentally, LME zinc inventory increased to 199,000 mt, and the contango structure of LME zinc contracts continued; China has entered the off-season, and the overall demand in the industry has weakened. Profit margins at smelters declined with TCs and zinc prices falling, thus stimulating expectations of production cuts. Cost support increased. Meanwhile, taking into account the increase in the proportion of direct shipments to downstream buyers and the expectation of production cuts, the market is optimistic about the accumulation of stocks during the CNY. There is little room for zinc prices to continue to fall.
The SHFE 2403 zinc contract prices are expected to move between 20,500-21,500 yuan/mt.
LME is expected to trade between $2,450-2,630/mt.
Spot premiums in China’s major markets are expected to stand at 0-50 yuan/mt.
