Trump's Frequent Tariff Policies Lead to a Long Upper Shadow Bearish Candle for LME Zinc [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,817/mt. At the beginning of the session, LME zinc fluctuated around the daily moving average. During European trading hours, bears reduced positions, pushing LME zinc up rapidly to a high of $2,847.5/mt. Subsequently, LME zinc declined to a low of $2,796/mt. During the night session, LME zinc recovered part of its losses but edged down slightly at the close, ultimately closing up at $2,808/mt, an increase of $2.5/mt or 0.09%. Trading volume decreased to 93,400 lots, and open interest fell by 282 lots to 233,000 lots. Overnight, the most-traded SHFE zinc 2504 contract opened at 23,605 yuan/mt. At the beginning of the session, SHFE zinc reached a high of 23,645 yuan/mt. Subsequently, bears increased positions, causing SHFE zinc to plunge to a low of 23,435 yuan/mt. However, as bears reduced positions, SHFE zinc rebounded, recovering most of its losses and forming a "V" shape reversal. It ultimately closed down at 23,550 yuan/mt, a decrease of 15 yuan/mt or 0.06%. Trading volume decreased to 55,507 lots, while open interest increased by 1,386 lots to 91,723 lots.

Macro: Trump stated that a 25% tariff on the EU, covering automobiles and other goods, is expected to be imposed soon. Trump ordered the termination of oil transactions with Venezuela. The Ukrainian Prime Minister announced that the government approved a mineral framework agreement with the US. Zelensky stated that under the mineral agreement, Ukraine is not required to repay the aid already provided by the US. Trump claimed that Russia agreed to the deployment of European peacekeeping forces in Ukraine, which the Kremlin denied. Nvidia's quarterly report showed total revenue, AI business revenue, and next-quarter revenue outlook all exceeded expectations. CICC and Galaxy Securities issued announcements clarifying merger rumors, stating they had not received any relevant information. The National Financial Regulatory Administration and the National Development and Reform Commission (NDRC) held a symposium on equity investment pilot projects for financial asset investment companies. DeepSeek announced a reduction in API call prices during idle periods, with the maximum reduction reaching 75%.

Spot Market:

Shanghai: In the early session, the market quoted against the average price for cargoes with invoices dated next month, with limited quotes against the contract. During the second trading session, ordinary domestic brands were quoted at discounts of 10~0 yuan/mt against the 2503 contract. Huize was quoted at premiums of 90 yuan/mt, Baiyin at premiums of 10 yuan/mt, and high-end brand Shuangyan at premiums of 110 yuan/mt against the 2503 contract. Yesterday, the Shanghai market still had ample supply. The futures market slightly declined compared to the previous day, but downstream enterprises had mostly completed restocking at low prices the day before. As a result, demand for zinc ingot purchases and deliveries was not high yesterday, and overall spot transactions weakened. However, suppliers continued to stand firm on quotes, leading to a slight increase in spot premiums.

Guangdong: Spot discounts of 10 yuan/mt against Shanghai were maintained, with the Shanghai-Guangdong price spread unchanged. In the first session, suppliers quoted Qilin, Mengzi, Huize, and Lan zinc at discounts of 20~10 yuan/mt. In the second session, Qilin, Mengzi, and Lan zinc were quoted at discounts of 30~10 yuan/mt against the online price. Overall, the futures market continued to decline slightly compared to the previous day. Downstream buyers were driven by low prices to make small purchases, and overall transactions were similar to the previous day. Spot premiums continued to rise. However, according to feedback from traders and downstream buyers, recent purchases were mostly for restocking at low prices, while actual downstream consumption remained relatively moderate.

Tianjin: Tianjin's spot market was at a discount of approximately 10 yuan/mt compared to Shanghai. By midday, Xinzi was quoted at parity or premiums of 0~10 yuan/mt against the 03 contract. Xikuang was quoted at premiums of 0~30 yuan/mt, Bailing at discounts of 10 yuan/mt, and high-end brand Zijin at premiums of 10~40 yuan/mt. Yesterday, the futures market continued to pull back. Some downstream buyers, concerned about a potential rebound in the futures market, continued restocking at low prices. However, most downstream buyers had already made significant purchases the previous day, leading to slightly weaker transactions yesterday. Traders raised premiums to sell, showing a slight tendency to stand firm on quotes. Overall, market transactions were moderate.

Ningbo: Spot premiums of 10 yuan/mt against Shanghai were reported, with mainstream quotations in Ningbo against the 2503 contract. In the first session, Qilin was quoted at discounts of 30 yuan/mt, Honglu-V at premiums of 20 yuan/mt, and Huize at premiums of 110 yuan/mt against the 2503 contract. In the second session, traders' quotes remained unchanged from the first session. Most low-priced cargoes from earlier periods had been sold out, and Ningbo's market supply was limited yesterday. Traders quoted conservatively, leading to a rise in spot premiums. With the futures market continuing to operate at low levels, downstream enterprises showed strong interest in inquiries and purchases. Restocking at low prices resulted in moderate overall spot transactions in Ningbo yesterday.

Social Inventory: On February 26, LME zinc inventory increased by 600 mt to 165,375 mt, up 0.36%. According to SMM, as of February 24, total zinc ingot inventory across seven regions monitored by SMM reached 145,600 mt, an increase of 10,000 mt compared to February 17 and 8,500 mt compared to February 20, indicating a rise in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc formed a long upper shadow candlestick, with support provided by the lower Bollinger Band. Trump's frequent tariff policies have created market uncertainty, while the continuous increase in overseas inventories has exerted some pressure on LME zinc's upward movement. Overnight, SHFE zinc formed a bearish candlestick, with resistance from multiple moving averages above and support from the lower Bollinger Band below. On the supply side, improvements have driven processing fees higher, while downstream consumption demand is expected to gradually recover. The combination of supply-side loosening expectations and potential consumption improvement suggests that zinc prices may maintain a fluctuating trend in the short term. Further macro guidance should be closely monitored.