US Tariff Hike Triggers Market Concerns Over Demand, LME Zinc Center Shifts Downward [SMM Zinc Holiday Market Review]

SMM February 5 News: Holiday Performance Review: During the domestic Chinese New Year holiday, LME zinc fluctuated downward, with the futures market center continuously shifting lower. The middle Bollinger Band consistently exerted pressure. Concerns over demand arose as the US raised tariffs on Canada and Mexico, causing LME zinc to weaken further, hitting a low of $2,706/mt on February 3. Later, the US announced a one-month delay in the tariff hike, alleviating market concerns over demand. LME zinc rebounded, and as of Tuesday's close, it settled at $2,812/mt, up $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. LME zinc inventory fell by 2,850 mt to 176,425 mt. Macro sentiment remained bearish, with overseas concerns persisting over demand following the tariff hike. Expectations for US Fed interest rate cuts weakened, and fundamentals provided limited support for zinc prices. Post-Holiday Outlook: According to SMM, based on the production schedule of domestic zinc smelters, February 2025 production is expected to slightly increase MoM compared to January. Pre-holiday social inventory was recorded at 70,400 mt, and the pace of zinc ingot inventory buildup may slow. Post-holiday, downstream and end-user operations are gradually resuming, with consumption slowly rebounding. Fundamentals side, support for domestic market zinc prices remains limited. Coupled with strong expectations for domestic policies to address the US tariff hike issue, zinc prices are expected to fluctuate within a range.