Risk-averse funds exited the market, and zinc prices maintained a fluctuating trend. [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes on April 18

Futures market: Overnight, LME zinc opened at $2,598/mt. After a brief consolidation at the opening, longs increased their positions, pushing the price up to $2,617/mt. Subsequently, bears intervened at highs, causing LME zinc to fluctuate downward, touching a low of $2,558/mt during European trading hours. Entering the night session, LME zinc returned to the daily average line for consolidation, eventually closing up at $2,595/mt, an increase of $17.5/mt, or 0.69%. Trading volume decreased to 11,596 lots, and open interest decreased by 6,570 lots to 203,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened at 21,950 yuan/mt. At the opening, longs increased their positions, quickly pushing the price up to 22,085 yuan/mt before bears increased their positions to suppress the price. SHFE zinc fluctuated downward, touching a low of 21,870 yuan/mt before rebounding, recording a "V" reversal, and eventually closing up at 22,015 yuan/mt, an increase of 50 yuan/mt, or 0.23%. Trading volume decreased to 84,317 lots, and open interest increased by 3,574 lots to 131,000 lots.

Macro: Trump criticized Powell, accusing him of "playing politics" and threatening to fire him. Trump stated, "We will reach a very good trade deal with China." Weak growth prompted the European Central Bank to cut interest rates, and the market increased bets on further policy easing. U.S. stock indices showed mixed performance as the market assessed the progress of U.S.-Japan trade negotiations and concerns over interest rate prospects.

Spot market:

Shanghai: In the morning session, the market quoted at parity with the average price, with no quotes against the futures. In the second trading session, ordinary domestic brands were quoted at premiums of 170~190 yuan/mt against the 2505 contract, Huize at premiums of 200~240 yuan/mt against the 2505 contract, and the premium brand Shuangyan at premiums of 240~270 yuan/mt against the 2505 contract. In the morning session, the futures market rebounded from lows, and market inquiries and transactions gradually weakened. Traders continued to lower yesterday's spot premiums to facilitate sales, but downstream companies still made just-in-time procurement. Spot transactions were generally moderate, and it is expected that spot premiums will continue to decline as delivery zinc ingots flow out.

Guangdong: Spot premiums against Shanghai were 10 yuan/mt, and the Shanghai-Guangdong price spread remained unchanged. In the first session, suppliers quoted premiums of 430~480 yuan/mt for Qilin, Mengzi, Huize, Feilong, and Lanzinc. In the second session, Qilin, Mengzi, and Huize were quoted at premiums of 440~470 yuan/mt. Overall, affected by the current high spot premiums and discounts, downstream buyers were mostly观望, with some having already made low-price purchases last night. Combined with the continuous upward movement of the futures market yesterday, spot transactions were generally moderate.

Tianjin: Tianjin quoted premiums of around 100 yuan/mt against Shanghai. By the close of the morning session, Xizi was quoted at premiums of 470~480 yuan/mt against the 05 contract, Xikuang delivery at premiums of 300 yuan/mt against the 05 contract, Chihong 1# at premiums of 200 yuan/mt against the 2505 contract, and the premium brand Zijin at premiums of 500 yuan/mt against the 05 contract. Yesterday, zinc prices rebounded slightly, but some downstream buyers had already made price-fixed purchases last night, and downstream buyers still had a bearish sentiment. Companies mainly made just-in-time restocking, and traders still had a firm stance on quotes. Premiums remained at highs, and overall transactions were weaker than the previous day.

Ningbo: Spot premiums against Shanghai were 10 yuan/mt, and mainstream quotes in Ningbo were against the 2505 contract. In the first session, Yongchang was quoted at premiums of 200 yuan/mt against the 2505 contract, Qilin at premiums of 200 yuan/mt against the 2505 contract, and Honglu-v at premiums of 240 yuan/mt against the 2505 contract. In the second session, traders' quotes remained unchanged from the previous session. Yesterday, there were not many traders selling in the Ningbo market, but downstream buyers tended to purchase low-price delivered zinc ingots. Self pick-up from warehouses was slightly sluggish, and traders continued to lower yesterday's spot premium quotes. However, the futures market rebounded slightly, and spot transactions showed no improvement.

Social inventory: On April 17, LME zinc inventory increased by 4,800 mt to 195,350 mt, a rise of 2.52%. According to SMM communication, as of April 17, the total zinc ingot inventory in SMM's seven regions was 100,000 mt, a decrease of 2,100 mt from April 14 and a decrease of 5,600 mt from April 17, recording a decline in domestic inventory.

Zinc price forecast: Overnight, LME zinc recorded a four-day losing streak, with various moving averages forming resistance above. Overnight, the US dollar rebounded slightly, and with the start of the Easter holiday today, funds mainly exited the market, and LME zinc maintained a fluctuating trend. Overnight, SHFE zinc recorded a bullish candlestick, with the MACD bearish candlestick narrowing. Stimulated by low zinc prices, downstream companies increased their buying the dip, and social inventory destocking reached nearly 6,000 mt, providing bottom support for zinc prices.