Zinc prices fluctuate at highs, with attention to the pressure at the round-number levels above [SMM Morning Meeting Summary]

Zinc Morning Meeting Summary on May 15

 Futures Market: Overnight, LME zinc opened at $2,720/mt. After initial consolidation around the daily average line amid a tug-of-war between longs and shorts, longs increased their positions, pushing LME zinc higher throughout the night session, reaching a high of $2,786/mt. It pulled back slightly towards the end of the session, closing up at $2,761.5/mt, up $41/mt or 1.51%. Trading volume increased to 18,503 lots, while open interest rose by 3,036 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened higher with a gap at 22,885 yuan/mt. It oscillated around the daily average line initially, then drifted slightly lower, operating below the daily average line. Overall, it traded steadily, closing up at 22,800 yuan/mt, up 280 yuan/mt or 1.24%. Trading volume decreased to 73,396 lots, while open interest increased by 391 lots to 105,000 lots.

Macro: Trump: I am a big fan of cryptocurrencies and a believer in AI. Sources: The US is not seeking a depreciation of the US dollar in tariff negotiations. OPEC maintains its crude oil demand growth forecasts for this year and next unchanged. The list of the Russian delegation for the Russia-Ukraine negotiations has been finalized, with Putin not on the list. PBOC: Social financing increased by 16.34 trillion yuan from January to April, with M2 up 8% YoY in April. China Securities Depository and Clearing Corporation: Account verification is a routine business, not a special arrangement for "investigating off-exchange margin financing". The second meeting of the China-EU Financial Working Group was held in Brussels, Belgium.

Spot Market:

Shanghai: The near-month price spread continued to narrow. With zinc prices rising significantly on the futures market yesterday, downstream players remained on the sidelines with low purchase willingness. Coupled with the impact of imported zinc ingots arriving at lower prices, which weighed on spot quotes, Shanghai spot premiums continued to weaken yesterday. Enterprises maintained just-in-time procurement, with overall spot trading performance being average.

Guangdong: Overall, the futures market's center of gravity moved higher yesterday. Downstream procurement sentiment cooled, and it was difficult for market traders to sell at high prices, resulting in sluggish spot trading sentiment. Spot premiums in Guangdong pulled back slightly yesterday amid difficult trading conditions.

Tianjin: The Tianjin market was trading at parity with the Shanghai market. With futures prices rising yesterday, downstream players were cautious about purchasing at high prices, conducting only small amounts of just-in-time restocking. There was almost no inquiry, and traders lowered premiums to sell, but trading was mainly among traders. Overall market trading was poor.

Ningbo: Imported zinc ingots from AZ, SMC, and others impacted the Ningbo market at lower prices. Domestic traders continued to lower their spot premium quotes to sell. Some downstream players purchased imported zinc at lower prices, showing almost no procurement sentiment for domestic zinc. Coupled with the futures market rising significantly from the previous day, domestic spot trading performance in the Ningbo market was poor yesterday.

Social Inventory: LME zinc inventory decreased by 900 mt to 167,050 mt on May 14, a decline of 0.54%. According to SMM communications, as of May 12, the total zinc ingot inventory across seven locations tracked by SMM was 85,500 mt, an increase of 1,400 mt from May 6 and 2,200 mt from May 8, indicating a rise in domestic inventory.

 Zinc Price Forecast: Overnight, LME zinc recorded a five-day winning streak, with the 40-day moving average turning into a support line and the 5-day moving average above acting as resistance. As global trade tensions ease, it is expected that metal demand may continue, boosting investor confidence. Coupled with the US dollar in the doldrums, zinc prices are expected to {{fluctuate at highs}}. Overnight, SHFE zinc recorded a small bearish candlestick, yet the center of the daily candlestick moved upward, and the KDJ indicator expanded upward. Overnight, amidst easing fears of an economic recession, bullish sentiment resurfaced, with non-ferrous metals generally rising. Zinc prices filled the gap of previous declines. Considering the macroeconomic optimism, zinc prices are expected to {{fluctuate at highs}}. However, with the expectation of a large influx of imported zinc ingots, zinc prices are expected to lack upward momentum, and it is anticipated that there will still be pressure at the upper integer levels.