The US dollar weakened, and LME zinc showed some upward movement [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes for April 23

Futures market: Overnight, LME zinc opened at $2,605/mt, quickly surged to a high of $2,629/mt after opening, then fell back from highs and fluctuated downward, touching a low of $2,580/mt during the midday session. After another failed attempt to rally, it returned to hover around the daily average line, finally closing up at $2,601/mt, up $6/mt, a gain of 0.23%. Trading volume increased to 12,577 lots, while open interest decreased by 2,179 lots to 201,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened at 22,325 yuan/mt, reaching a high of 22,385 yuan/mt after opening, then fluctuated downward around the daily average line, touching a low of 22,210 yuan/mt before rebounding to near the daily average line, finally closing flat at 22,285 yuan/mt. Trading volume decreased to 83,014 lots, while open interest increased by 4,020 lots to 134,000 lots.

Macro: Trump clearly has no intention of firing Powell; the White House signals a relaxation in trade tensions; expectations for a US Fed interest rate cut this year decline; Putin reportedly hints for the first time at the possibility of talks with Ukraine; the US imposes new sanctions on Iran, Iran delays negotiations; Musk: Time investment in DOGE will sharply decrease in May; a package of policies to expand domestic demand is on the way; e-commerce platforms fully cancel refund-only policies; daily trading volume of Asia's largest gold ETF exceeds 10 billion yuan.

Spot market:

Shanghai: Recent news of smelter maintenance has caused some traders to worry about future zinc ingot supply, leading to a certain degree of reluctance to sell. Coupled with the limited number of traders shipping goods in Shanghai recently, some suppliers in the market are standing firm on quotes. Yesterday, spot premiums in the market slightly increased, but spot transactions did not show significant improvement.

Guangdong: Spot premiums against Shanghai were 40 yuan/mt. Overall, yesterday's futures market center moved downward, downstream purchasing sentiment improved, market trading conditions improved, and the transaction atmosphere warmed up. Currently, the relatively tight supply of some brands in the market, combined with the downward trend in futures, has pushed spot premiums and discounts higher.

Tianjin: Tianjin reported premiums of around 110 yuan/mt against Shanghai. Zinc prices remain mainly fluctuating, downstream purchasing sentiment is not high, orders are gradually weakening, most companies are restocking based on rigid demand, spot circulation in Tianjin is gradually increasing, and traders have lowered premiums and discounts to ship goods, leading to a decline in premiums. Overall transactions were average.

Ningbo: Spot premiums against Shanghai were 10 yuan/mt. Recently, the supply in the Ningbo market has been limited. Yesterday, there was some divergence in supplier quotes in the market, and spot premiums increased slightly. However, the futures market continued to fluctuate in the morning, and some downstream companies have not yet started pre-holiday restocking, with inquiries and purchases still performing averagely.

Social inventory: On April 22, LME zinc inventory decreased by 3,125 mt to 192,225 mt, a drop of 1.6%. According to SMM communication, as of April 21, the total zinc ingot inventory in seven regions monitored by SMM was 93,000 mt, a decrease of 12,600 mt compared to April 14 and a decrease of 7,000 mt compared to April 17, recording a decline in domestic inventory.

Zinc price forecast: Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance above. Continued weakness in the US dollar has boosted non-ferrous metals. After the holiday, LME zinc is expected to recover upward, but market concerns about future downstream demand persist, and LME zinc may have limited upside potential. Overnight, SHFE zinc recorded a bearish candlestick, with the 20-day moving average providing support below. On the supply side, smelters are continuously increasing production, while downstream consumption is about to enter the off-season in May. The fundamentals do not provide strong support for zinc prices, and SHFE zinc is expected to maintain a fluctuating trend.