Market Concerns Over Demand Persist, LME Zinc Under Pressure and Declining [SMM Zinc Morning Meeting Notes]

March 11 Zinc Morning Meeting Summary

Futures Market: Overnight, LME zinc opened at $2,882/mt, initially reaching a high of $2,893.5/mt before fluctuating downward along the daily average line, hitting a low of $2,841.5/mt near the session's end, and finally closing down at $2,844.5/mt, a decrease of $37.5/mt or 1.3%. Trading volume fell to 8,622 lots, and open interest decreased by 2,390 lots to 217,000 lots. Overnight, the most-traded SHFE zinc 2504 contract opened at 23,800 yuan/mt, briefly touched a high of 23,830 yuan/mt, then fluctuated slightly along the daily average line before declining to a low of 23,720 yuan/mt. Subsequently, SHFE zinc rebounded slowly from the low and returned above the daily average line near the session's end, closing down at 23,785 yuan/mt, a decrease of 50 yuan/mt or 0.21%. Trading volume dropped to 39,759 lots, and open interest decreased by 611 lots to 81,935 lots.

Macro: The U.S. Energy Secretary stated that the removal of Canadian oil tariffs is possible; the Trump administration plans to cancel the sale of strategic oil reserves; Ukraine may propose an air and sea ceasefire with Russia; Elon Musk is expected to lead DOGE for another year; China's February retail sales of passenger NEVs increased nearly 80% YoY; the China Academy of Information and Communications Technology has initiated the drafting of technical standards.

Spot Market:

Shanghai: In the early session, market quotes were at premiums of 10–20 yuan/mt. The futures market fell significantly compared to last Friday, prompting some traders to raise their spot premium quotes. Sentiment to stand firm on quotes was strong, but downstream purchasing remained lackluster. Overall, spot premiums and discounts in Shanghai saw limited increases, with trading mainly among traders.

Guangdong: On par with Shanghai spot. Overall, the futures market dropped back slightly compared to last Friday. Some downstream just-in-time procurement slightly improved overall transactions, but some traders still faced difficulties in selling and lowered premiums to facilitate sales. Market trading sentiment improved, and spot premiums rose slightly.

Tianjin: Tianjin spot was at a discount of around 10 yuan/mt against Shanghai. The futures market pulled back yesterday, but downstream buyers maintained a bearish outlook, with limited just-in-time restocking. Coupled with restocking already completed early last week and ongoing environmental protection-driven production restrictions in northern regions, overall demand remained weak with low procurement enthusiasm. Some traders holding warehouse-delivered zinc ingots maintained a sentiment to stand firm on quotes, while most traders kept their quotes stable. Overall market transactions were poor.

Ningbo: Spot premiums were 10 yuan/mt against Shanghai spot. A large volume of goods arrived at Ningbo port yesterday, with additional Kirin zinc ingots expected to arrive on Friday, resulting in ample market supply. Some traders showed a sentiment to offload goods, keeping Ningbo spot premiums at low levels. Downstream enterprises maintained just-in-time procurement, with no significant improvement in overall transactions.

Social Inventory: On March 10, LME zinc inventory decreased by 75 mt to 160,100 mt, down 0.05%. As of March 10, SMM's seven-region zinc ingot inventory totaled 135,800 mt, down 700 mt from March 3 but up 1,800 mt from March 6, indicating an increase in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance. The market continues to focus on the impact of tariffs on future demand, keeping LME zinc under pressure. Further macro guidance is needed. Overnight, SHFE zinc also recorded a bearish candlestick, with the 20-day moving average providing support below. On Monday, SMM zinc inventory increased slightly by 1,800 mt WoW to 135,800 mt, reflecting sluggish destocking in social inventory. Fundamentals provide insufficient support for zinc prices, and SHFE zinc is expected to fluctuate downward.