US Dollar Index Falls Back from Highs, LME Zinc Center Slightly Moves Up [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,941.5/mt, followed by a tug-of-war between bulls and bears. The center of LME zinc fluctuated around $2,935/mt. During the European trading session, increased short positions pushed the center of LME zinc slightly upward before quickly pulling back to a low of $2,925/mt. Entering the night session, LME zinc rose rapidly to a high of $2,986/mt, then gradually pulled back, ultimately closing up at $2,957/mt, an increase of $12.5/mt or 0.42%. Trading volume decreased to 70,864 lots, while open interest increased by 3,352 lots to 223,000 lots. Overnight, LME zinc recorded a bullish candlestick, with resistance from the 40-day moving average above and support from the 5-day and 10-day moving averages below. Overnight, the most-traded SHFE zinc 2503 contract opened at 24,230 yuan/mt. Initially, SHFE zinc edged downward to a low of 24,155 yuan/mt. Subsequently, increased long positions drove SHFE zinc to fluctuate upward, reaching a high of 24,420 yuan/mt. Later, profit-taking by longs caused SHFE zinc to fluctuate downward, ultimately closing up at 24,310 yuan/mt, an increase of 95 yuan/mt or 0.39%. Trading volume decreased to 79,416 lots, while open interest decreased by 1,884 lots to 101,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with resistance from the 20-day and 60-day moving averages above and support from the 5-day and 10-day moving averages below.

Macro: Donald Trump officially took the oath of office as US President, addressing topics such as tariffs, energy, and green policies, without mentioning cryptocurrencies. US media reported that Trump would not impose new tariffs on his first day in office. The Houthi forces stated they would continue attacking ships linked to Israel. The Israeli Defense Forces chief anticipated a "major operation" in the West Bank soon. Vladimir Putin expressed Russia's willingness to engage in dialogue with the US government regarding the Ukraine situation. President Xi Jinping emphasized implementing more proactive macroeconomic policies in 2025 to promote high-level technological self-reliance and strength. Vice Premier He Lifeng highlighted the vigorous implementation of urban renewal and the effective advancement of key urban renewal tasks. Offshore yuan surged by 750 points against the US dollar during the day, recovering to 7.27.

Spot Market:

Shanghai: The market quoted around a discount of 30-10 yuan/mt to the average price. Yesterday, some traders cleared inventory at year-end, causing a sharp drop in spot premiums in Shanghai. However, as the peak holiday season for downstream enterprises in east China approached, demand for zinc ingots weakened significantly. Although some enterprises restocked due to rigid demand, overall market transactions were average.

Guangdong: Spot discounts against Shanghai were 60 yuan/mt. Although zinc prices showed a downward trend yesterday, they remained relatively high compared to earlier levels. Meanwhile, the holiday season for downstream end-users further weakened market demand, resulting in sluggish spot trades. Yesterday, the price spread between futures contracts narrowed, but mainstream quotations remained largely unchanged, and spot premiums were flat.

Tianjin: Spot discounts against Shanghai were 40 yuan/mt. The futures market rebounded yesterday, but most downstream enterprises were already on holiday, leading to poor demand. Many traders adopted a wait-and-see attitude, with few quotations. Smelters continued to lower premiums, and overall transactions were weak.

Ningbo: Spot premiums against Shanghai were 20 yuan/mt. This week, some major zinc alloy producers in Ningbo began their holidays, resulting in low willingness to purchase raw materials downstream. Additionally, as year-end approached, Ningbo market traders gradually started to take breaks. Yesterday, there were almost no quotations from suppliers in Ningbo, and overall spot trades were sluggish.

Social Inventory: On January 20, LME zinc inventory decreased by 2,225 mt to 199,125 mt, a decline of 1.11%. As of Monday (January 20), total zinc ingot inventory across seven regions monitored by SMM stood at 59,400 mt, down by 1,600 mt from January 13 but up by 600 mt from January 16, indicating an increase in domestic inventory.

Zinc Price Forecast: During yesterday's inauguration, Trump did not mention imposing higher tariffs. The US dollar index declined, and US media reported that Trump would not impose new tariffs on his first day in office. LME zinc rose slightly and is expected to maintain a fluctuating trend in the short term. As the off-season for downstream consumption approaches, spot premiums and discounts in various markets are gradually declining, and domestic inventory is increasing. However, influenced by the absence of formal announcements on tariff policies from Trump, SHFE zinc is also expected to maintain a fluctuating trend.