Tariff Disturbances Persist, LME Zinc Center Moves Upward [SMM Morning Meeting Summary]

Futures Market:

Last Friday, LME zinc opened at $2,807/mt. In early trading, longs reduced positions, and LME zinc trended downward, hitting a low of $2,772/mt during European trading hours. Subsequently, shorts took profits and exited, causing LME zinc to fluctuate upward, peaking at $2,814.5/mt during the night session. Later, the center gradually pulled back to near the daily moving average, closing down at $2,798/mt, a decrease of $11.5/mt or 0.41%. Trading volume increased to 11,290 lots, while open interest decreased by 3,902 lots to 226,000 lots. Last Friday, the most-traded SHFE zinc 2504 contract opened at 23,495 yuan/mt. In early trading, shorts reduced positions, and SHFE zinc quickly surged to a high of 23,640 yuan/mt. Subsequently, longs reduced positions, and SHFE zinc fluctuated downward below the daily moving average, consolidating near 23,510 yuan/mt. It finally closed up at 23,510 yuan/mt, an increase of 85 yuan/mt or 0.36%. Trading volume decreased to 70,890 lots, and open interest decreased by 3,676 lots to 93,231 lots.
Macro:

The meeting between Trump and Zelensky at the White House ended "unpleasantly," with US officials suggesting Ukraine might need new leadership. Ukraine and the UK signed a loan agreement, and it was reported that the UK, France, and Ukraine would jointly propose a Ukraine peace plan to the US. The US Commerce Secretary announced that tariffs on Canada and Mexico would be imposed on March 4, with the tariff levels pending Trump's decision. US Democrats claimed that Republicans had withdrawn from budget negotiations, increasing the risk of a government "shutdown." The US January PCE data was broadly in line with expectations, and the Atlanta Fed model projected a negative GDP growth rate for the US in Q1. Macron stated that if the US confirmed a 25% tariff on Europe, Europe would respond with "reciprocal" measures. Trump announced a cryptocurrency reserve target. Chinese President Xi Jinping emphasized that preventing and resolving various risks is a key task in building a safe China. The CSRC stated that conditions are not yet in place to establish the Chongqing Stock Exchange, and the current conditions for launching ETFs based on REITs are also incomplete. DeepSeek disclosed that the theoretical cost-profit ratio is 545%, and the theoretical daily profit of the V3/R1 inference system is as high as 3.46 million yuan.
Spot Market:
Shanghai:

In the early session, the market quoted the average price for cargoes with invoices dated next month, with few quotes against the futures market. During the second trading session, ordinary domestic brands were quoted at premiums of 0~20 yuan/mt against the SHFE 2503 contract, Huize was quoted at a premium of 100 yuan/mt, Baiyin at a premium of 10 yuan/mt, and the high-priced brand Shuangyan at a premium of 120 yuan/mt against the SHFE 2504 contract. Last Friday morning, the futures market continued its low-level fluctuating trend. Some traders were reluctant to sell at low prices and raised their spot quotes. However, downstream enterprises held a bearish sentiment toward zinc prices and maintained a strong wait-and-see attitude, with spot purchases mainly driven by rigid demand. Overall, spot transactions in the Shanghai market were average.
Guangdong:

Spot premiums were 20 yuan/mt higher than in Shanghai, widening the Shanghai-Guangdong price spread. In the first session, suppliers quoted Qilin, Mengzi, Huize, and Lan zinc at discounts of 5 yuan/mt to premiums of 5 yuan/mt. In the second session, Qilin, Mengzi, and Lan zinc were quoted at discounts of 10 yuan/mt to premiums of 10 yuan/mt against the online price. Overall, last Friday's market decline improved trading activity, with some downstream buyers purchasing at lower prices. Trading among traders was also active, but some traders maintained a sentiment to stand firm on quotes, leading to average sales.
Tianjin:

Tianjin prices were on par with Shanghai. By midday, Xinzi was quoted at parity to premiums of 0~40 yuan/mt against the SHFE 2503 contract, Xikeng at discounts of 20~30 yuan/mt, Bailing at premiums of 20~30 yuan/mt, and the high-priced brand Zijin at premiums of 50~80 yuan/mt. Last Friday, the futures market continued to pull back, and downstream buyers continued to restock at lower prices. However, due to consumption constraints, procurement volumes were average. New long-term contracts had already started execution, and traders increased purchases. Trading among traders was active, with a slight sentiment to stand firm on quotes, leading to a small rise in premiums. Overall, market transactions were average.
Ningbo:

Spot premiums were 30 yuan/mt higher than in Shanghai, with mainstream quotes in Ningbo against the SHFE 2503 contract. In the first session, Qilin was quoted at premiums of 40-50 yuan/mt, Honglu-V at premiums of 30 yuan/mt, and Baiyin at premiums of 40 yuan/mt against the SHFE 2503 contract. In the second session, traders' quotes remained unchanged from the first session. Last Friday, there were few traders selling in the Ningbo market. Traders continued to stand firm on quotes, and Ningbo premiums continued to rise. However, downstream enterprises, having previously purchased at lower prices, currently held sufficient raw material inventories and showed low interest in inquiries and purchases last Friday. Overall, spot transactions weakened.
Social Inventory:

On February 28, LME zinc inventory decreased by 525 mt to 164,425 mt, a decline of 0.32%. According to SMM, as of February 27, total zinc ingot inventory across seven regions monitored by SMM was 145,300 mt, an increase of 8,200 mt from February 20 but a decrease of 300 mt from February 24, with domestic inventory recording a decline.
Zinc Price Forecast:

Last Friday, LME zinc recorded a long lower-shadow candlestick. Trump's imminent tariff policy raised concerns about its impact on the global economy, suppressing the performance of base metals. Meanwhile, inflation data met expectations, and the US dollar strengthened, keeping base metals under pressure. LME zinc is expected to maintain a fluctuating trend in the short term. Last Friday, SHFE zinc recorded a small bullish candlestick with a long upper shadow, with resistance formed by the 10-day and 20-day moving averages. Macro sentiment weakened, geopolitical impacts persisted, zinc concentrate TC continued to rise, and supply is expected to remain relatively loose. Meanwhile, downstream consumption is still recovering. Zinc prices are expected to fluctuate downward in the short term.