Trump Is Expected to Demand an Immediate Interest Rate Cut; LME Zinc Records Three Consecutive Declines [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,892.5/mt, quickly reaching a high of $2,894.5/mt before plunging to $2,860/mt and fluctuating rangebound. During the European trading session, longs reduced positions, causing LME zinc to decline further to a low of $2,839/mt. It then attempted to rebound but faced resistance and pulled back, ultimately closing down at $2,844.5/mt, a decrease of $48.5/mt or 1.68%. Trading volume increased to 77,725 lots, while open interest decreased by 2,540 lots to 217,000 lots. Overnight, LME zinc recorded a third consecutive bearish candlestick, with the middle Bollinger Band providing resistance and the lower Bollinger Band offering support. Meanwhile, the most-traded SHFE zinc 2503 contract opened at 23,730 yuan/mt, starting at a low level. Early in the session, longs increased positions, pushing SHFE zinc up to a high of 23,860 yuan/mt. It then fluctuated along the daily moving average and slightly declined as longs reduced positions near the close, ultimately settling up at 23,760 yuan/mt, an increase of 55 yuan/mt or 0.23%. Trading volume decreased to 44,411 lots, while open interest increased by 110 lots to 101,000 lots. Overnight, SHFE zinc recorded a bullish candlestick with no lower shadow, facing resistance from multiple moving averages above.

Macro: US President Trump stated that he would request the US Fed to implement an immediate interest rate cut and urged Saudi Arabia and OPEC to lower oil prices. Trump signed an executive order to release classified documents related to the Kennedy assassination, evaluate the establishment of a national digital asset reserve, and prohibit central bank digital currencies. The Kremlin responded to Trump's sanction threats, stating that no particularly new factors were observed. Argentine President Milei is considering withdrawing from the Paris Climate Agreement. Chinese President Jinping Xi conducted a field trip in Shenyang, Liaoning Province. The Ministry of Finance noted that there is still room for China's large state-owned commercial insurance companies to increase their investments in the capital market and is studying a long-term performance evaluation system for the national social security fund. The China Securities Regulatory Commission (CSRC) announced that over the next three years, the market value of A-shares held by public funds will increase by at least 10% annually, and the scale of the second batch of long-term stock investment trials by insurance funds this year will not be less than 100 billion yuan. The National Financial Regulatory Administration encouraged insurance funds to steadily increase their proportion of equity market investments. The People's Bank of China stated that it would enhance the convenience of using policy tools and promote the expansion and increase of such tools when appropriate.

Spot Market:

Shanghai: Spot quotes for cargoes with invoices dated this month were near the average price. Yesterday, the number of traders shipping in the Shanghai market decreased significantly, coinciding with the Chinese New Year break. Spot transactions were mainly limited to a few enterprises stocking up before the holiday. Zinc ingot demand declined noticeably, and some traders continued to lower premiums to clear inventory before the holiday. Overall, market transactions were sluggish.

Guangdong: Spot premiums against Shanghai were 60 yuan/mt. The number of traders shipping further decreased yesterday. Despite the futures market center pulling back, downstream enterprises had already closed for the holiday, and market activity remained sluggish. Spot premiums continued to decline and are expected to drop further.

Tianjin: Tianjin's discount against Shanghai was 10 yuan/mt, with a spot-futures price spread of 10 yuan/mt. Despite a significant pullback in the futures market yesterday, most downstream enterprises were on holiday with no restocking demand, focusing mainly on locked-in prices. Most traders were also on holiday, with only a few purchasing and restocking before the holiday. Spot cargo availability was limited, and overall transactions were moderate.

Ningbo: Spot premiums against Shanghai were 20 yuan/mt. Most traders and downstream enterprises in Ningbo had already entered the holiday period. Yesterday, there were almost no spot quotes from traders, and downstream inquiries and purchases were similarly scarce. Market activity remained sluggish.

Social Inventory: On January 23, LME zinc inventory decreased by 1,825 mt to 191,125 mt, a drop of 0.95%. As of Thursday, January 23, SMM's seven-region zinc ingot inventory totaled 62,600 mt, an increase of 3,800 mt from January 16 and 320 mt from January 20, indicating a domestic inventory buildup.

Zinc Price Outlook: US President Trump stated that he would request the US Fed to implement an immediate interest rate cut but has yet to make a clear statement on tariff issues. LME zinc is expected to fluctuate downward, with attention on further macro front developments. Domestically, the festive atmosphere is intensifying, with more downstream enterprises closing for the holiday and social inventory increasing. Zinc prices are expected to fluctuate downward in consolidation.