Expectations for US Fed Interest Rate Cuts Keep Changing, Zinc Price Center Moves Downward in Both Domestic and Overseas Markets [SMM Market Review - Weekly Price Commentary]

SMM January 17 News:

LME Zinc: At the beginning of the week, LME zinc edged higher; subsequently, the market digested the news that the US December non-farm payrolls far exceeded expectations last Friday, pushing the US dollar index above the 110 mark to a new high since 2022, while overseas inventories decreased, and LME zinc maintained a fluctuating trend. Then, the US December New York Fed's 1-year inflation expectations recorded 3%, higher than expected, while interest rate futures traders priced in a US Fed interest rate cut of less than 25 basis points this year. However, the continued decline in overseas inventories, coupled with US December PPI data falling short of expectations, failed to ease inflation concerns, and LME zinc continued to maintain a fluctuating trend. Subsequently, LME zinc declined, but lower-than-expected CPI data alleviated market concerns about accelerating inflation, increasing expectations of interest rate cuts, and the US dollar index pulled back, driving LME zinc upward. Then, as the market continued to digest macroeconomic data, LME zinc maintained a fluctuating trend. Later, LME zinc rose due to the pullback in the US dollar index, but the center of LME zinc shifted downward this week. As of 15:00 on Thursday, LME zinc recorded $2,860.5/mt, down $2/mt, a decrease of 0.07%.

SHFE Zinc: At the beginning of the week, SHFE zinc edged upward but then declined under the influence of the overseas market. Subsequently, the imbalance in domestic fundamentals eased, smelters saw a rebound in processing fees, and social inventory increased by 3,000 mt. However, downstream enterprises gradually went on holiday, and actual end-user consumption weakened. Under multiple influences, SHFE zinc maintained a fluctuating trend. Later, under the influence of the overseas market, SHFE zinc gradually declined. Then, affected by lower-than-expected US December core CPI data and the January New York Fed Manufacturing Index, SHFE zinc fluctuated upward. Subsequently, on the fundamentals side, the resumption of production at a northern mine boosted domestic supply-side production, while the number of downstream enterprises on holiday continued to increase, limiting actual end-user consumption on the demand side. SHFE zinc gradually pulled back, and the center of SHFE zinc shifted downward this week. As of 15:00 on Thursday, SHFE zinc recorded 23,790 yuan/mt, down 355 yuan/mt, a decrease of 1.47%.

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