News of smelter maintenance emerges, SHFE zinc prices rise [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Summary on May 27

Futures Market: Overnight, due to the UK's Spring Bank Holiday, the LME was closed for the day. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,185 yuan/mt. In the early session, SHFE zinc fluctuated along the daily moving average. Later, news spread that a domestic smelter would continue maintenance and halt production, prompting bulls to enter the market. SHFE zinc surged, reaching a high of 22,695 yuan/mt at the end of the session, and eventually closed at 22,645 yuan/mt, up 460 yuan/mt or 2.07%. Trading volume increased to 17.3 lots, and open interest rose by 13,984 lots to 133,000 lots.

Macro: It is reported that the EU has planned to accelerate negotiations with the US; the new Gaza ceasefire agreement will include Israel's "partial withdrawal"; Iran: fully prepared to launch appropriate strikes against Israel and will not accept a suspension of uranium enrichment to ensure a nuclear deal with the US; German Chancellor Merz: Western countries have lifted range restrictions on weapons assistance to Ukraine; Russian Deputy Prime Minister: OPEC+ has not yet discussed increasing production in July; Trump's company plans to raise approximately $3 billion to invest in cryptocurrencies; the General Offices of the CPC Central Committee and the State Council: support publicly listed firms to introduce institutional investors with a shareholding ratio of over 5% as active shareholders; Moody's maintains China's sovereign credit rating, and the Ministry of Finance: a positive reflection of the country's promising economic outlook.

Spot Market:

Shanghai: Despite a slight decline in the futures market yesterday, it did not meet the downstream's psychological expectations. Enterprises did not engage in much pricing at low points, and traders faced difficulties in selling, resulting in poor spot trading. Overall, spot premiums remained stable.

Guangdong: Overall, the futures market's center shifted downward yesterday, while the available spot cargo in the market was limited. Under these circumstances, the premiums quoted by traders increased slightly, and spot trading was relatively average.

Tianjin: The futures market pulled back slightly, and some enterprises priced at low points. Morning trading was moderate, but later became sluggish. Traders had a mindset of refusing to budge on prices in their offers yesterday, and premiums increased slightly. Trading was mainly among traders, and overall market trading was average.

Ningbo: Yesterday, there were fewer traders selling spot cargo in the Ningbo market. Spot premiums remained high, and downstream enterprises maintained their rigid demand for purchases. However, due to the limited cargo volume, traders with available cargo had relatively smooth spot trading. Continuous attention should be paid to subsequent cargo arrivals.

Social Inventory: On May 23, LME zinc inventory decreased by 2,725 mt to 153,500 mt, a decline of 1.74%. According to SMM communications, as of Monday (May 26), the total zinc ingot inventory across seven locations tracked by SMM was 78,800 mt, a decrease of 5,000 mt from May 19 and a decrease of 1,600 mt from May 22, indicating a decrease in domestic inventory. Zinc Price Outlook: Overnight, the LME was closed. Overnight, SHFE zinc recorded a large bullish candlestick. Trump suspended the imposition of high tariffs on the EU, and market risk aversion sentiment eased somewhat. From a fundamental perspective, news spread that a smelter in South China would extend its maintenance, triggering market concerns about zinc ingot supply. Additionally, consumption remained resilient, and SHFE zinc surged. It is expected that today, the market will mainly fluctuate at highs.