US Dollar Strengthens, LME Zinc Records a Long Upper Cross [SMM Morning Meeting Summary]

Futures: On Friday, LME zinc opened at $2,927.5/mt. At the start of the session, LME zinc slightly rose to a high of $2,927.5/mt, then quickly fell. During this period, LME zinc attempted to rise above the daily average line but was resisted by increased short positions, leading it to fall back and reach a low of $2,900/mt. Subsequently, LME zinc recovered its losses and fluctuated around $2,920/mt, finally closing at $2,927.5/mt, up $8.5/mt, or 0.29%. Trading volume decreased to 68,461 lots, while open interest increased by 1,834 lots to 22.5 lots. The most-traded SHFE zinc 2505 contract opened at 23,810 yuan/mt on Friday. At the beginning of the session, long positions increased, pushing SHFE zinc to a high of 24,010 yuan/mt. Then, SHFE zinc fluctuated around 23,950 yuan/mt, with a low of 23,810 yuan/mt, and finally closed at 23,980 yuan/mt, up 210 yuan/mt, or 0.88%. Trading volume decreased to 102,000 lots, and open interest decreased by 729 lots to 124,000 lots. Macro: Trump: The US Air Force is advancing the development of the sixth-generation fighter, to be called F-47; Fed's Williams: The current moderately restrictive monetary policy is "fully appropriate"; Kremlin Spokesman: Putin and Trump agreed to continue contacts as necessary; Sources: The White House has begun reviewing a second round of large-scale federal agency layoffs; Lan Foan: The central government is providing substantial funds to boost consumption; PBOC Q1 meeting: Suggested increasing the intensity of monetary policy regulation, and considering RRR cuts and interest rate cuts at an opportune time; Ministry of Commerce: Continues to impose anti-dumping duties on imported resorcinol from Japan. Spot Market: Shanghai: In the morning, market quotes were at premiums of 0~10 yuan/mt against the average price, with few quotes against the futures. In the second trading session, ordinary domestic brands quoted at premiums of 0~10 yuan/mt against the 2504 contract, silver at a premium of 20 yuan/mt, Huize at a premium of 50 yuan/mt, and the high-priced brand Shuangyan at a premium of 60 yuan/mt. The futures market rose compared to the previous day, and downstream buyers who had previously fixed prices and held some inventory showed low interest in purchasing on Friday. Traders were selling more, and overall premiums remained weak, with spot transactions also performing poorly. Guangdong: Spot premiums against Shanghai were 10 yuan/mt, and the Shanghai-Guangdong price spread widened. In the first session, suppliers quoted Kirin, Mengzi, Huize, and Lan zinc at discounts of 5~premiums of 20 yuan/mt. In the second session, Kirin quoted at premiums of 5~20 yuan/mt. Overall, some traders lowered their premiums to facilitate sales. With zinc prices rising at the start of the session, downstream purchases had been strong earlier, and end-user buying interest decreased, but trading among traders remained active. In the second session, the number of sellers decreased. On Friday, spot premiums and discounts in Guangdong slightly declined. Tianjin: Tianjin reported a discount of about 10 yuan/mt against Shanghai. By the close of the morning session, Xinzi quoted at premiums of 40~50 yuan/mt against the 04 contract, factory delivery of Xinkai Jili quoted at discounts of 0~10 yuan/mt, Bailing delivery quoted at 60 yuan/mt, and the high-priced brand Zijin quoted at premiums of 50~80 yuan/mt. Zinc prices slightly rebounded on Friday, and downstream buyers had restocked more in the previous two days, reducing their purchasing enthusiasm. Downstream buyers were cautious, mainly restocking for essential needs. With fewer arrivals in Tianjin recently, traders maintained stable quotes, and the price difference between warehouse self-pickup and factory delivery remained significant, resulting in moderate overall transactions. Ningbo: Spot quotes against Shanghai were at a premium of 50 yuan/mt, with the main quotes in Ningbo against the 2504 contract. In the first session, Yongchang quoted at a premium of 50 yuan/mt, and Kirin at premiums of 50~60 yuan/mt. In the second session, trader quotes remained unchanged. The supply in the Ningbo market did not improve, and traders continued to stand firm on their quotes. Premiums remained high on Friday, and downstream buyers purchased based on essential needs, with overall spot transactions remaining stable. Social Inventory: On March 21, LME zinc inventory decreased by 825 mt to 154,400 mt, a decline of 0.53%. According to SMM, as of March 20, the total zinc ingot inventory in seven regions was 131,000 mt, down 4,900 mt from March 13 and 7,800 mt from March 17, indicating a reduction in domestic inventory. Zinc Price Forecast: On Friday, LME zinc formed a long-lower-shadow doji, with the 5-day moving average acting as resistance and the 20/60-day moving averages providing support. On Friday, due to Fed officials indicating no rush to cut interest rates, the US dollar strengthened, suppressing LME zinc. Meanwhile, overseas inventories decreased, and LME zinc maintained a fluctuating trend. On Friday, SHFE zinc formed a bullish candle, with the 60-day moving average acting as resistance and the 20/40-day moving averages providing support. On Friday, with both imported zinc concentrates and refined zinc increasing YoY, and domestic consumption gradually recovering, the macro outlook for promoting domestic consumption is positive. It is expected that zinc prices will maintain a fluctuating trend in the short term.