US February Unemployment Rate Exceeds Previous Value, LME Zinc Fluctuates at High Levels [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Summary on March 10

Futures Market: Last Friday, LME zinc opened at $2,929/mt, initially reaching a high of $2,929/mt before fluctuating around the daily average line. During the night session, it declined to a low of $2,873.5/mt, then maintained a low-level fluctuation, ultimately closing down at $2,882/mt, a decrease of $44/mt or 1.5%. Trading volume decreased to 11,584 lots, and open interest fell by 3,265 lots to 220,000 lots. Last Friday, the most-traded SHFE zinc 2504 contract opened at 23,880 yuan/mt, initially dipping to a low of 23,820 yuan/mt before rebounding and climbing to a high of 23,975 yuan/mt. It then fell back near the daily average line, ultimately closing down at 23,915 yuan/mt, a decrease of 45 yuan/mt or 0.19%. Trading volume decreased to 62,154 lots, and open interest fell by 3,328 lots to 86,292 lots.

Macro: US non-farm payrolls in February fell short of expectations; Powell stated that no rush to cut interest rates before the impact of Trump’s policies becomes clearer; Trump mentioned that some tariffs might increase over time; Russian Deputy Prime Minister indicated that OPEC+ might change its production increase decision after April; the US threatened Iran with "military action" to push for nuclear negotiations; PBOC expanded gold reserves for the fourth consecutive month; this year, childcare subsidies will be issued, with operational plans currently being drafted; China imposed a 100% tariff on Canadian canola oil.

Spot Market:

Shanghai: Early morning market quotations were on par with the average price. Last Friday, the futures market fluctuated at highs above 24,000 yuan/mt. Downstream enterprises remained cautious due to high prices, and market traders continued to lower spot premiums to facilitate sales. However, overall transactions remained sluggish, mostly limited to just-in-time restocking with post-pricing deals.

Guangdong: On par with Shanghai spot prices. Overall, last Friday's futures market rose compared to Thursday, making it difficult for traders to sell. Market transactions were relatively sluggish, with some traders slightly lowering premiums to facilitate sales. Spot premiums and discounts declined slightly, but some traders with limited spot inventory showed reluctance to sell, which also contributed to the slight decline in spot premiums.

Tianjin: On par with Shanghai spot prices. Last Friday, the futures market continued to fluctuate at highs. Downstream buyers were cautious due to high prices, with limited just-in-time restocking. Overall purchasing enthusiasm was low, and environmental protection-driven production restrictions weakened overall demand. Traders lowered premiums and discounts to facilitate sales, resulting in poor overall market transactions.

Ningbo: Spot premiums of 30 yuan/mt against Shanghai spot prices. Last Friday, Ningbo's market had limited supply, but the futures market remained at highs. Downstream inquiries for purchases were still moderate. Some traders continued to lower spot premiums to facilitate sales, with spot transactions mainly conducted through post-pricing deals. Overall transactions remained sluggish.

Social Inventory: On March 7, LME zinc inventory decreased by 775 mt to 160,175 mt, a decline of 0.48%. As of March 6, SMM's seven-region zinc ingot inventory totaled 134,000 mt, down by 11,300 mt from February 27 and by 2,500 mt from March 3, indicating a reduction in domestic inventory.

Zinc Price Forecast: Last Friday, LME zinc recorded a bearish candlestick, with the 5-day moving average providing support below. The US February unemployment rate was higher than the previous value, and the US dollar index remained at low levels, supporting LME zinc to sustain its high levels. However, tariff concerns continued to weigh on market sentiment regarding demand, limiting LME zinc's upward momentum. Last Friday, SHFE zinc recorded a bullish candlestick, with the 5-day moving average forming resistance above. Although domestic zinc ingot inventory continued destocking, reflecting a gradual recovery in downstream zinc consumption, domestic zinc concentrate TCs continued to rise. Expectations for production increase in refined zinc in March weakened supply-side support for zinc prices, suppressing the center of SHFE zinc prices.