SHFE Zinc in the Doldrums, Focus on Subsequent Domestic Consumption [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes on April 21

Futures market: Due to the Easter holiday, LME zinc was closed last Friday. Last Friday, the most-traded SHFE zinc 2506 contract opened at 22,100 yuan/mt. After opening, shorts increased their positions, pushing SHFE zinc down to a low of 21,935 yuan/mt before it rebounded, reaching a high of 22,255 yuan/mt during the day. SHFE zinc then maintained a fluctuating trend around 22,200 yuan/mt, finally closing at 22,230 yuan/mt, up 180 yuan/mt, a gain of 0.82%. Trading volume increased to 85,377 lots, while open interest decreased by 2,988 lots to 126,000 lots.

Macro: Trump shared insights on negotiations: "Whoever has gold holds the dominance." Trump's tariff war triggered "internal chaos," with US media reporting over 700 protests nationwide. Trump is considering whether to fire Powell. Japan is considering increasing imports of US rice and soybeans in tariff negotiations. Putin announced a 30-hour ceasefire, but Zelenskyy said it was not enough, demanding 30 days. The second round of indirect negotiations on the Iran nuclear issue reportedly made progress. The Ministry of Commerce announced it would expand reform task authorizations for pilot free trade zones. Jensen Huang concluded his China trip, reportedly without meeting the founder of DeepSeek. The US announced final measures against China's shipbuilding and other sectors, with responses from the Ministry of Commerce and multiple industry associations. Official sources debunked rumors of a "complete cancellation of Guangdong-Hong Kong dual license plates."

Spot market:

Shanghai: Zinc futures prices fluctuated. Downstream players stocked up at low prices last week, holding certain inventories. Last Friday, inquiries and purchases were sluggish. Traders continued to lower spot premiums to facilitate sales, resulting in poor overall trading. Attention is focused on downstream stocking before the Labour Day holiday.

Guangdong: Spot premiums were 20 yuan/mt against Shanghai. Overall, futures prices maintained a fluctuating trend last Friday. Traders' reported premiums and discounts were not significantly different from the previous day. Downstream players had ample inventories from earlier stockpiling, with current purchases mainly driven by just-in-time procurement. Market trading sentiment weakened, while some brands faced spot shortages, leading to higher reported premiums and discounts.

Tianjin: Spot premiums were around 120 yuan/mt against Shanghai. Last Friday, zinc prices maintained a fluctuating trend. Downstream purchasing sentiment was low, with some still bearish. Enterprises mainly focused on just-in-time restocking. Coupled with shortages in the Tianjin region, traders held firm on quotes, keeping premiums at high levels. Overall trading was moderate.

Ningbo: Spot premiums were 10 yuan/mt against Shanghai. Recently, low-priced zinc ingots from Hualian and Kirin continued to impact the Ningbo market. Some downstream players reported ample inventories from earlier stockpiling and may halt purchases in the near term. Others maintained just-in-time procurement, resulting in moderate overall trading and a further decline in Ningbo spot premiums.

Social inventory: According to SMM, as of April 17, the total zinc ingot inventory across seven regions monitored by SMM was 100,000 mt, down 2,100 mt from April 14 and 5,600 mt from April 17, indicating a decline in domestic inventory.

Zinc price forecast: Last Friday, SHFE zinc recorded a bullish candlestick, with the middle Bollinger Band forming resistance. Continued destocking of zinc ingots supported prices during the week, but macro factors continued to weigh on zinc prices. Market concerns about downstream demand persist, and SHFE zinc may remain in the doldrums.