Trade frictions continue to ease, with SHFE and LME price centers rising slightly [SMM Market Review - Weekly Price Review]

LME Zinc: At the beginning of the week, LME zinc prices declined slightly. Subsequently, substantive progress was made in the high-level economic and trade talks between China and the US, and the Joint Statement of the China-US Economic and Trade Talks in Geneva was released. The strained trade relations between China and the US eased somewhat, and overall market sentiment improved, driving LME zinc prices higher. Then, the US dollar index continued to rise, and as the market's positive sentiment was somewhat digested, LME zinc prices pulled back continuously. Subsequently, the US April CPI data unexpectedly pulled back, with the year-on-year rate of unadjusted CPI in April recording 2.3%, the lowest since February 2021. As a result, the US dollar index pulled back, giving up most of its gains from the previous day. Market concerns about the US economy intensified, and risk-averse sentiment gradually emerged. At the same time, Trump once again called on the US Fed to cut interest rates. Under these circumstances, LME zinc prices continued to rise. Then, as market news indicated that the trade tariff agreements between the US and countries such as Japan were "close to being finalized," and the US would not seek a weaker US dollar in tariff negotiations, the US dollar strengthened somewhat, and LME zinc prices continued to decline. As of 15:00 on Thursday this week, LME zinc was recorded at $2,748.5/mt, up $93/mt, or 3.5%.

SHFE Zinc: At the beginning of the week, SHFE zinc prices declined slightly. Subsequently, substantive progress was made in the economic and trade relations between China and the US, and the Joint Statement of the China-US Economic and Trade Talks in Geneva was released. Driven by the favourable macro front, SHFE zinc prices continued to rise. Then, as the market continued to digest macro sentiment, and according to SMM, as of Monday this week, there was a slight increase in domestic social inventory. Coupled with the continuous arrival of imported zinc ingots, SHFE zinc prices continued to decline under these circumstances. Subsequently, the US April CPI data unexpectedly cooled, and the US dollar index continued to pull back. Market confidence was somewhat dampened, and positive macro sentiment slightly pulled back, with risk-averse sentiment slightly emerging. Driven by the data and LME prices, SHFE zinc prices continued to rise. However, as market news indicated that the trade tariff agreements between the US and countries such as Japan were "close to being finalized," and the US stated that it would not seek a weaker US dollar in tariff negotiations, the US dollar strengthened. At the same time, according to SMM, as of Thursday this week, there was a slight increase in domestic social inventory, and the continuous arrival of imports replenished domestic inventory, causing SHFE zinc prices to pull back slightly. As of 15:00 on Thursday this week, SHFE zinc was recorded at 22,590 yuan/mt, up 400 yuan/mt, or 1.8%.

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