Macro Sentiment Improves, LME Zinc Center Shifts Upward [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,810/mt. At the beginning of the session, LME zinc briefly dipped below $2,807.5/mt. Subsequently, shorts reduced positions, and LME zinc climbed upward, with its center shifting to around $2,835/mt for consolidation. During the European trading hours, LME zinc quickly dipped again, but as shorts continued to exit, LME zinc surged during the night session, peaking at $2,860/mt. Later, the center gradually pulled back to near the daily moving average, closing up at $2,838/mt, an increase of $40/mt or 1.43%. Trading volume decreased to 11,197 lots, and open interest fell by 2,288 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2504 contract opened at 23,750 yuan/mt. At the beginning of the session, shorts reduced positions, and SHFE zinc fluctuated upward, peaking at 23,860 yuan/mt. Subsequently, longs reduced positions, and SHFE zinc fluctuated downward to below the daily moving average. Later, shorts took profits and exited, causing the center of SHFE zinc to rise again, closing up at 23,820 yuan/mt, an increase of 90 yuan/mt or 0.38%. Trading volume decreased to 58,989 lots, and open interest fell by 2,227 lots to 85,458 lots.
Macro

Trump: Reciprocal tariffs will take effect on April 2, with a 25% tariff on Canada and Mexico starting on March 4. Trump hinted that President Zelensky's position is at risk, stating that information on a mining agreement will be provided on Tuesday. The White House revealed that Trump will discuss an economic agenda, including tax cuts, on Wednesday. The Atlanta Fed's GDPNow model projected that the US Q1 GDP growth rate would be -2.8%. OPEC+ unexpectedly announced plans to continue production increases in April. In February, China's Caixin Manufacturing PMI reached a three-month high. Liu Jieyi stated that China's economic fundamentals are stable, with many advantages, strong resilience, and great potential, and the conditions and trends supporting long-term positive development remain unchanged. China is reportedly studying countermeasures to respond to the US's renewed tariff increases. The Ministry of Foreign Affairs responded that necessary measures will be taken to safeguard legitimate interests.
Spot Market
Shanghai: In the early session, market quotations were on par with the average price, with few quotes against futures. During the second trading session, ordinary domestic brands were quoted at premiums of 0~20 yuan/mt against the 2503 contract, Huize at premiums of 140 yuan/mt, Baiyin at premiums of 10 yuan/mt, and high-end brand Shuangyan at premiums of 150 yuan/mt. In the morning, futures prices rebounded from low levels. Downstream enterprises, having restocked at low prices last week, showed low purchasing sentiment yesterday. Although some traders maintained a sentiment to stand firm on quotes, overall spot transactions were sluggish, mainly limited to inter-trader activity. Spot premiums remained stable yesterday.
Guangdong: Spot premiums were 10 yuan/mt higher than in Shanghai, narrowing the Shanghai-Guangdong price spread. In the first session, suppliers quoted brands such as Qilin, Mengzi, Huize, Feilong, and Lantian at discounts of 10 yuan/mt to premiums of 10 yuan/mt. In the second session, Huize and Lantian were quoted at discounts of 10 yuan/mt against the online price. Overall, social inventories in Guangdong decreased, and futures prices slightly rose. Some downstream buyers showed resistance to high prices, but with end-user enterprises resuming production recently, there was stocking demand, driving spot premiums and discounts slightly higher. Spot premiums and discounts are expected to continue rising as downstream consumption improves.
Tianjin: Tianjin prices were on par with Shanghai. By midday, Xinzi was quoted at premiums of 40~60 yuan/mt against the 03 contract, Xikeng at discounts of 0~30 yuan/mt, Bailing at premiums of 40 yuan/mt, and high-end brand Zijin at premiums of 60~80 yuan/mt. Futures prices rebounded yesterday, but downstream enterprises, having restocked significantly last week, showed low purchasing enthusiasm due to high futures prices. With good sales last week, spot inventories were relatively low. Inter-trader activity was active, with traders showing a sentiment to stand firm on quotes. Overall market transactions weakened.
Ningbo: Spot premiums were 20 yuan/mt higher than in Shanghai, with mainstream quotations in Ningbo against the 2503 contract. In the first session, Qilin was quoted at premiums of 50 yuan/mt delivered against the 2504 contract, Honglu-V at premiums of 20 yuan/mt against the 2503 contract, and Baiyin at premiums of 10 yuan/mt against the 2503 contract. In the second session, traders' quotations remained unchanged from the first session. Yesterday, Ningbo's market was dominated by trader sales, with low purchasing willingness from downstream enterprises. Spot premiums lacked upward momentum, and enterprises purchased only to meet rigid demand. Overall spot transactions were average.
Social Inventory

On March 3, LME zinc inventory decreased by 825 mt to 163,600 mt, a decline of 0.5%. According to SMM, as of this Monday (March 3), total zinc ingot inventory across seven regions monitored by SMM stood at 136,500 mt, down by 9,100 mt from February 24 and by 8,800 mt from February 27, indicating a reduction in domestic inventory.
Zinc Price Forecast

Overnight, LME zinc recorded a long bullish candlestick, with support from the 5-day moving average below and resistance from the 10-day moving average above. US economic data was mediocre, and the US dollar weakened, leading to a broad rise in base metals. Continued destocking of LME zinc provided support for zinc prices. China's manufacturing PMI returned to the expansion territory, and consumption expectations improved. LME zinc's center is expected to continue fluctuating upward. Overnight, SHFE zinc recorded a small bullish candlestick, with support from the 5-day moving average below. Macro sentiment improved, and China's manufacturing PMI reached a three-month high. From a fundamental perspective, social inventories decreased, and downstream consumption improved. During the Two Sessions, the market anticipates favorable domestic policies. Zinc prices are expected to fluctuate upward.