Expectations for US Fed Interest Rate Cuts Weaken, LME Zinc Center Shifts Lower [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,817/mt. At the beginning of the session, LME zinc fluctuated along the daily moving average. By the European trading hours, it quickly declined to a low of $2,784.5/mt. Subsequently, with increased long positions, LME zinc advanced and peaked at $2,834/mt during the night session. It then consolidated near $2,818/mt towards the end of the session and closed higher at $2,812/mt, up by $3.5/mt or 0.12%. Trading volume decreased to 10,798 lots, while open interest increased by 2,119 lots to 228,000 lots. Overnight, LME zinc recorded a small bearish candlestick, with resistance from the 20-day moving average above and support from the 5-day moving average below. Meanwhile, SHFE zinc was closed overnight due to the Chinese New Year holiday.
Macro: US job vacancies hit their lowest level since September last year; Trump signed a memorandum to prevent Iran's nuclear weapons program and restrict its oil sales; Crypto Czar David Sacks is studying the feasibility of Bitcoin reserves; Morgan Stanley no longer expects the US Fed to cut interest rates in March; China's Ministry of Commerce has added the US-based PVH Group and Illumina Inc. to its unreliable entity list; China will impose additional tariffs of 10%-15% on certain imports originating from the US.
Spot Market:
Shanghai: On the last working day before the holiday, the market had largely entered holiday mode, with almost no transactions.
Guangdong: On the last working day before the holiday, Guangdong's spot premiums over Shanghai stood at 20 yuan/mt. Many suppliers were inquiring in the market, but as most traders were set to begin their holiday the next day, there were almost no spot quotes. Trading sentiment was sluggish, with futures fluctuating slightly and the price spread narrowing. However, due to the lack of transactions, premiums declined.
Tianjin: On the last trading day before the holiday, Tianjin's market was on par with Shanghai. The market had largely entered the Chinese New Year break, with no quotes and almost no transactions.
Ningbo: On the last trading day before the holiday, both downstream buyers and traders had already started their holiday, and no spot quotes were observed in the market.
Social Inventory: On February 4, LME zinc inventory decreased by 2,850 mt to 176,425 mt, a drop of 1.59%. As of January 27, total zinc ingot inventory across seven regions monitored by SMM stood at 70,400 mt, up by 11,000 mt from January 20 and by 780 mt from January 23, indicating an increase in domestic inventory.
Zinc Price Outlook: The US has postponed tariffs on Canada and Mexico by one month, easing market concerns. However, worries about subsequent demand persist. US job vacancies hit their lowest level since September last year, and the likelihood of the US Fed cutting interest rates in March has decreased. LME zinc is expected to fluctuate downward in the short term, with attention on the release of domestic policies. After the holiday, downstream and end-user sectors in the zinc market will gradually resume operations, but support for zinc prices remains weak. In the short term, zinc prices are expected to fluctuate downward.