Zinc Morning Meeting Summary on February 14

Futures Market: Overnight, LME zinc opened at $2,866.5/mt. In the early session, LME zinc fluctuated around the daily moving average, reaching a high of $2,872/mt. During the midday session, it fluctuated downward, hitting a low of $2,833/mt by the close and ultimately settled at $2,837.5/mt, down $28.5/mt or 0.99%. Trading volume decreased to 8,888 lots, and open interest fell by 1,641 lots to 225,000 lots. LME zinc recorded a bearish candlestick, with support from the 10-day moving average below. Overnight, the most-traded SHFE zinc 2503 contract opened at 23,745 yuan/mt. After the opening, SHFE zinc fluctuated around the daily moving average, hitting a low of 23,670 yuan/mt before rebounding from the low to a high of 23,850 yuan/mt. It then fell back from highs and ultimately settled at 23,737.5 yuan/mt, down 40 yuan/mt or 0.17%. Trading volume decreased to 53,235 lots, while open interest increased by 175 lots to 84,880 lots. SHFE zinc recorded a bearish candlestick, with resistance from the 40-day moving average above.

Macro: Trump signed a memorandum on reciprocal tariffs; US January PPI rose higher than expected. The Kremlin stated that Ukraine would participate in Russia-Ukraine peace talks. Netanyahu denied reports that all parties agreed to continue implementing the ceasefire agreement. Media reported that the State-owned Assets Supervision and Administration Commission (SASAC) is preparing to establish a National Data Group. The National Development and Reform Commission (NDRC) announced plans to expand the scope of trade-in policies for consumer goods. Joe Tsai confirmed Alibaba's collaboration with Apple on localized AI functions.

Spot Market:

Shanghai: In the early session, market quotations were on par with the average price. Many traders were active in selling, but with futures prices remaining high, downstream enterprises, having previously purchased raw material inventories, mainly engaged in just-in-time procurement. Overall, shipments and transactions remained sluggish, and spot premiums in Shanghai continued to decline.

Guangdong: Spot discounts of 20 yuan/mt against Shanghai. Overall, with futures prices rising, many end-users that had resumed operations restocked at lower prices earlier. However, current downstream consumption has not fully recovered, and weak demand combined with rising prices led to sluggish spot transactions. Traders faced difficulties in selling, and premiums declined.

Tianjin: Spot discounts of around 10 yuan/mt against Shanghai. Yesterday, futures prices rebounded, and downstream restocking was mainly just-in-time, with limited pricing activity. Large manufacturers primarily fulfilled long-term contracts, and demand remained weak. Traders, eager to sell, lowered premiums, resulting in a sluggish trading atmosphere in the overall market.

Ningbo: Spot premiums of 30 yuan/mt against Shanghai. Post-holiday, zinc alloy plants gradually resumed production. However, with zinc prices remaining high yesterday morning, some zinc alloy plants, having previously purchased raw material inventories, showed low purchase willingness for zinc ingots. Overall, spot transactions remained sluggish.

Social Inventory: On February 13, LME zinc inventory decreased by 1,200 mt to 163,425 mt, a decline of 0.73%. As of February 13, SMM's total zinc ingot inventory across seven regions stood at 123,300 mt, an increase of 16,300 mt compared to February 6 and an increase of 4,600 mt compared to February 10, indicating a buildup in domestic inventory.

Zinc Price Forecast: Trump's announcement of tariffs on US imports has heightened concerns over global trade, exerting bearish sentiment on zinc prices. LME zinc pulled back slightly from highs. From a fundamental perspective, although the buildup in zinc ingot inventory this week was limited, low inventory continues to support zinc prices. Additionally, downstream enterprises are gradually resuming production after the Lantern Festival. However, in the short term, there has been no significant improvement in spot consumption of zinc ingots, limiting the upward momentum for SHFE zinc, which is expected to maintain a fluctuating trend.