Macro Sentiment Improves, SHFE Zinc Rises [SMM Zinc Morning Comment]

Overnight, the White House announced that Trump would grant a one-month tariff exemption for cars imported under the USMCA agreement; in his congressional speech, Trump stated that reciprocal tariffs would take effect on April 2; Ukraine is preparing to sign a mineral agreement; the chip law should be repealed; the US CIA claimed it had ceased providing intelligence to Ukraine; US officials stated that if an agreement on minerals is reached, the suspension of aid to Ukraine would be lifted; the US ADP employment data for February fell short of expectations; US media revealed that the US and Hamas had held secret talks on the Gaza hostage issue; China's main development targets for 2025 are: GDP growth of around 5% and a consumer price index increase of about 2%; the drafting group of the Government Work Report stated that policies should be implemented decisively and in full to maximize their effectiveness; for the first time, the directive to "stabilize the real estate and stock markets" was included in the general requirements of the Government Work Report; domestic refined oil prices saw a "second consecutive drop."

Overnight, LME zinc opened at $2,820/mt. In early trading, LME zinc fluctuated downward along the daily average line, dipping to a low of $2,809/mt. During European trading hours, bears exited to avoid risks, and LME zinc fluctuated upward, closing at the intraday high of $2,886/mt, up $66.5/mt or 2.36%. Trading volume increased to 12,937 lots, while open interest decreased by 3,843 lots to 222,000 lots. Overnight, LME zinc recorded a long bullish candlestick. Concerns over the impact of tariffs on inflation and the economy led investors to start pricing in the possibility of a full-scale economic contraction in the US. Additionally, Trump's delay of some auto tariffs and the decline in the US dollar index boosted base metals broadly, with LME zinc expected to continue fluctuating at high levels.

Overnight, the most-traded SHFE zinc 2504 contract opened at 23,800 yuan/mt. In early trading, SHFE zinc briefly moved downward, hitting a low of 23,690 yuan/mt. Subsequently, bulls increased their positions, driving SHFE zinc upward past the daily average line, reaching a high of 23,870 yuan/mt near the session's end, and finally closing at 23,865 yuan/mt, up 220 yuan/mt or 0.93%. Trading volume decreased to 69,560 lots, while open interest increased by 2,786 lots to 88,213 lots. Overnight, SHFE zinc recorded a long bullish candlestick. Improved macro sentiment, the inclusion of the directive to "stabilize the real estate and stock markets" in the general requirements of the Government Work Report for the first time, and positive expectations from the Two Sessions provided some support. Coupled with the boost from the overseas market, SHFE zinc's center shifted upward, and zinc prices are expected to primarily fluctuate within a range.