Nyrstar's Zinc Smelters Announce Production Cuts, LME Zinc Spikes Intraday [SMM Zinc Morning Meeting Summary]

March 13 Zinc Morning Meeting Summary

Futures Market: Overnight, LME zinc opened at $2,913.5/mt, initially fluctuating downward to a low of $2,898/mt. It then quickly rebounded to a high of $2,975/mt before pulling back below the daily average line. Near the session's end, LME zinc slightly rebounded to close near the daily average line, ultimately closing up at $2,933/mt, an increase of $13/mt or 0.45%. Trading volume rose to 21,305 lots, and open interest increased by 955 lots to 215,000 lots. Overnight, the most-traded SHFE zinc 2505 contract opened at 24,080 yuan/mt, reaching a high of 24,120 yuan/mt in the early session before fluctuating downward to a low of 23,935 yuan/mt. It eventually closed up at 23,965 yuan/mt, an increase of 150 yuan/mt or 0.63%. Trading volume rose to 55,165 lots, and open interest increased by 7,579 lots to 89,708 lots.

Macro: US February CPI data came in below expectations across the board; the US fiscal year budget deficit hit a record high for the same period; a senior Russian official stated, "Putin is unlikely to agree"; the EU will impose retaliatory tariffs on $26 billion worth of US products next month; the Russian central bank may allow limited cryptocurrency purchases by investors; starting next month, interbank forex market long-term derivative transaction fees will be temporarily waived; the Shanghai Stock Exchange announced adjustments to the scope of benchmark market-making bonds; the National Healthcare Security Administration introduced new pricing projects related to brain-computer interfaces; Manus: 2 million people are waiting to use Manus.

Spot Market:

Shanghai: In the early session, market average prices were quoted with a premium of 20 yuan/mt. The overall futures market rebounded significantly. Yesterday, sentiment for purchasing and price collection weakened, and traders lowered their spot quotes to facilitate sales. Downstream buyers mainly engaged in just-in-time procurement, and spot transactions were average.

Guangdong: Spot premiums were 10 yuan/mt against Shanghai. Overall, zinc prices opened higher with a gap yesterday, leading to cautious sentiment among downstream buyers, which dampened end-user procurement enthusiasm. Coupled with some enterprises having already made low-price purchases the day before, downstream inquiries decreased, and trading among traders was more active. The overall market atmosphere was subdued, and spot premiums declined.

Tianjin: Tianjin spot prices were at a discount of around 10 yuan/mt against Shanghai. The futures market rebounded yesterday, but downstream buyers were cautious due to high prices, resulting in low procurement enthusiasm. Overall downstream consumption remained weak, while traders actively sold by slightly lowering premiums. The overall market transactions were poor.

Ningbo: Spot premiums were 20 yuan/mt against Shanghai. Low-priced zinc ingots at the port continued to impact the spot market, prompting some traders to lower their spot premium quotes to facilitate sales. Ningbo premiums declined MoM, and downstream enterprises maintained just-in-time procurement for raw materials. Market transactions showed signs of weakening yesterday.

Social Inventory: On March 12, LME zinc inventory decreased by 450 mt to 161,375 mt, a decline of 0.28%. 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 bullish candlestick, with support from the 5-day moving average. LME zinc inventory decreased by 450 mt to 161,375 mt, a decline of 0.28%. US February non-seasonally adjusted CPI YoY was below market expectations, and the US dollar index remained at low levels. Additionally, Nyrstar announced yesterday that its Hobart zinc smelter will reduce production by approximately 25% starting in April 2025. With expectations of reduced supply, LME zinc saw significant intraday gains. Overnight, SHFE zinc recorded a bearish candlestick, with resistance from the upper Bollinger Band. Boosted by overseas market trends, SHFE zinc opened higher with a gap during the night session. However, recent domestic spot consumption remained weak, and fundamental support for zinc prices showed no improvement, leading SHFE zinc to fluctuate downward after the opening.