The Job Market Remains Resilient, LME Zinc Fluctuates Downward [SMM Morning Meeting Summary]

Futures: Overnight, LME zinc opened at $2,954.5/mt, initially fluctuating around the daily average line, reaching a high of $2,958.5/mt. During the European trading session, longs reduced positions, causing SHFE zinc to fluctuate downward below the daily average line, touching a low of $2,893/mt, and finally closing at $2,898/mt, down $54/mt, a decline of 1.83%. Trading volume increased to 86,561 lots, while open interest decreased by 622 lots to 225,000 lots. Overnight, the most-traded SHFE zinc 2505 contract opened at 24,000 yuan/mt, initially dropping rapidly below the daily average line as longs reduced positions, touching a low of 23,865 yuan/mt. Subsequently, a fierce battle between bulls and bears ensued, with SHFE zinc fluctuating around the daily average line, finally closing at 23,880 yuan/mt, down 255 yuan/mt, a decline of 0.93%. Trading volume decreased to 81,087 lots, while open interest decreased by 7,916 lots to 111,000 lots.

Macro: US initial jobless claims were lower than expected; Ontario Premier: The US will grant full or partial tariff exemptions for Canadian cars; EU plans to target US service exports, including large tech companies; The South Korean government will announce emergency measures for automakers in April; Brazilian President Lula: Will impose retaliatory tariffs on US products; Two departments: Continue to implement offshore trade stamp duty preferential policies; Deputy Governor of the Central Bank: Will adjust RRR cuts and interest rate cuts based on domestic and overseas economic and financial conditions.

Spot market:

Shanghai: In the morning session, market quotations were at premiums of 0~10 yuan/mt against the average price, with fewer quotations against the futures. In the second trading session, ordinary domestic quotations were at discounts of 10~premiums of 10 yuan/mt against the 2504 contract, Baiyin was at parity against the 2504 contract, and the high-priced brand Shuangyan was at premiums of 40 yuan/mt against the 2504 contract. Entering the new long-term contract cycle, many traders were selling, and the futures market remained firm. However, downstream purchase willingness remained low yesterday, and spot transactions by suppliers were poor, with spot premiums also showing no improvement.

Guangdong: Spot discounts of 30 yuan/mt against Shanghai, with the Shanghai-Guangdong price spread widening. In the first session, suppliers offered discounts of 45~20 yuan/mt against Qilin, Mengzi, Huize, and Lanzinc. In the second session, Qilin and Mengzi offered discounts of 30 yuan/mt against the net price. Overall, affected by the high futures market, downstream purchase willingness was low, mainly consuming previous inventories. Market transactions were light, with slightly increased trading among traders, but overall spot transactions remained weak. Some traders still held firm on quotes, but under high futures and premiums, downstream and traders' purchase willingness was low. Spot premiums and discounts slightly declined yesterday.

Tianjin: Tianjin reported discounts of around 10 yuan/mt against Shanghai. By the midday close, Xizi reported premiums of 30~60 yuan/mt against the 04 contract, factory deliveries to Xikuang reported discounts of 0~40 yuan/mt against the 04 contract, Bailing deliveries reported around 50 yuan/mt against the 05 contract, and the high-priced brand Zijin reported premiums of 60~100 yuan/mt against the 04 contract. Yesterday, zinc prices mainly fluctuated, with low downstream purchasing enthusiasm, mainly restocking for rigid demand. Traders actively sold, with trading mainly among traders, and overall transactions were average.

Ningbo: Spot premiums of 40 yuan/mt against Shanghai, with mainstream quotations in Ningbo against the 2504 contract. In the first session, Yongchang reported premiums of 40 yuan/mt against the 2504 contract, Qilin reported premiums of 40 yuan/mt against the 2504 contract, Honglu-v reported premiums of 20 yuan/mt against the 2504 contract, and Huize reported premiums of 80 yuan/mt against the 2504 contract. In the second session, traders' quotations remained unchanged from the previous session. Ningbo market traders mainly sold, but downstream rigid demand purchases remained unchanged. With the futures market remaining high, spot premiums lacked upward momentum. Although some downstream companies began restocking for Qingming, overall transactions remained average.

Social inventory: On March 27, LME zinc inventory decreased by 2,000 mt to 144,575 mt, a decline of 1.36%. According to SMM communication, as of March 27, SMM's seven-region zinc ingot inventory totaled 130,000 mt, down 1,000 mt from March 20 and up 1,100 mt from March 24, with domestic inventory recording an increase.

Zinc price forecast: Overnight, LME zinc recorded a large bearish candle, with the upper Bollinger Band forming resistance and the 40/60-day average lines providing support. US weekly initial jobless claims were 224,000, lower than the expected 225,000, indicating resilience in the job market, leading to a decline in LME zinc. Overnight, SHFE zinc recorded a bearish candle, with the 5-day average line forming resistance and the 40-day average line providing support. Driven by the overseas market, SHFE zinc fell. Meanwhile, SMM data showed an increase in domestic social inventory, weakening support for zinc prices. However, with continuous recovery in end-use consumption and expectations of increased domestic spot supply, SHFE zinc is expected to remain mainly fluctuating in the short term.