SMM Zinc Morning Meeting Summary on April 29
Futures market: Overnight, LME zinc opened at $2,649/mt. Early in the session, LME zinc quickly dropped to $2,625.5/mt. Subsequently, bulls increased their positions, and LME zinc fluctuated upward, reaching a high of $2,657.5/mt during the night session. However, the upward momentum weakened, and LME zinc fluctuated downward throughout the session, ending near the daily average line. It closed up at $2,654/mt, up $8.5/mt or 0.32%. Trading volume decreased to 7,562 lots, while open interest increased by 2,089 lots to 207,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened at 22,520 yuan/mt. Early in the session, SHFE zinc briefly rose, reaching a high of 22,560 yuan/mt. Subsequently, bulls exited the market, and SHFE zinc fell to a low of 22,465 yuan/mt. It then fluctuated near the daily average line, with fluctuations of less than 100 yuan. It closed up at 22,530 yuan/mt, up 10 yuan/mt or 0.04%. Trading volume decreased to 42,847 lots, while open interest decreased by 465 lots to 117,000 lots.
Macro: Exclusive interview with foreign media: Trump believes no red lines will change tariff policies; the US and Ukraine may sign a mineral agreement as early as this week; the US Treasury Department raises its Q2 borrowing size expectations; Pakistan's defense minister: India's military offensive is imminent; South Korea expects it is unlikely to reach a trade agreement with the US before the June election; China's gold consumption and gold ETF holdings increased YoY in Q1; China will introduce and implement several measures to stabilize employment, stabilize the economy, and promote high-quality development; the central bank: will implement RRR cuts and interest rate cuts at an appropriate time and create new structural monetary policy tools; the Ministry of Foreign Affairs: the heads of state of China and the US have not had a phone call recently.
Spot market:
Shanghai: In the morning session, the market offered premiums of 0-10 yuan/mt against the average price, with fewer quotes against the futures market. Yesterday, market traders focused on selling, and the futures market slightly declined. Some downstream buyers bought the dip, and some traders reported improved spot transactions. However, imported zinc ingots continued to flow into the Shanghai market before the holiday, and the rise in domestic spot premiums was sluggish.
Guangdong: Premiums against Shanghai spot were 30 yuan/mt, and the Shanghai-Guangdong price spread narrowed. Overall, yesterday's decline in the futures market improved market trading sentiment. Currently, there is less spot supply in the market, and traders are offering higher premiums and discounts. However, with the Labour Day holiday approaching, traders and some downstream enterprises conducted a small amount of pre-holiday stockpiling. Multiple factors drove the market premiums and discounts higher.
Tianjin: Tianjin's premiums against Shanghai were around 80 yuan/mt. The futures market continued to fluctuate. Downstream buyers had locked in prices earlier, and the sentiment for stockpiling before the Labour Day holiday was weak, with a bearish outlook on prices. Traders continued to lower premiums and discounts, which declined, and overall transactions were moderate.
Ningbo: Premiums against Shanghai spot were 10 yuan/mt. In the second time slot, traders' quotes were flat compared to the previous time slot. Yesterday, the futures market slightly declined, and some downstream buyers bought the dip and stockpiled. Overall transactions were moderate, and there were not many traders selling in the Ningbo market yesterday, so spot premiums remained stable.
Social inventory: On April 28, LME zinc inventory decreased by 725 mt to 179,325 mt, a decline of 0.4%. According to SMM communications, as of April 28, the total zinc ingot inventory across seven locations tracked by SMM was 85,900 mt, a decrease of 7,100 mt from April 21 and an increase of 100 mt from April 24. Domestic inventory recorded an increase.
Zinc price outlook: Overnight, LME zinc recorded a small bullish candlestick, with the 5/10-day moving averages providing support below. Trump believes no red lines will change tariff policies, and the market is concerned about trade prospects. The US dollar index weakened, and LME inventory continued to decline, with the center of LME zinc rebounding. Overnight, SHFE zinc recorded a small bullish candlestick. From a fundamental perspective, expectations for mine production increases are insufficient, but consumption growth is limited. SHFE zinc is expected to continue fluctuating.
