US dollar strengthens, LME zinc center moves lower [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,730/mt. In the early session, LME zinc briefly rose, hitting a high of $2,738.5/mt. Subsequently, bulls reduced their positions, causing LME zinc to dive. It touched a low of $2,683/mt during European trading hours before its center shifted to oscillate near the daily average line. It eventually closed down at $2,709/mt, down $3/mt or 0.16%. Trading volume increased to 9,583 lots, while open interest decreased by 887 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,380 yuan/mt. In the early session, SHFE zinc quickly rose, hitting a high of 22,485 yuan/mt. With mixed long and short positions, the center of SHFE zinc fell back near the daily average line, touching a low of 22,355 yuan/mt during the session. It eventually closed up at 22,410 yuan/mt, up 80 yuan/mt or 0.36%. Trading volume decreased to 66,848 lots, while open interest decreased by 216 lots to 121,000 lots.

Macro: Trump expressed great satisfaction with imposing a 50% tariff on the EU. Director of the US National Economic Council: Tariffs on certain countries may be reduced to 10% or lower. US media: Trump may impose new sanctions on Russia in the coming days. Florida Governor signs a bill recognizing gold and silver as legal tender. Trump Media & Technology Group announces a Bitcoin funding deal worth approximately $2.5 billion. ASEAN-China-GCC Summit Joint Statement: Explore cooperation in local currency and cross-border payments. National Financial Regulatory Administration: Strengthen research and formulation of policies related to the development and supervision of digital finance.

Spot Market:

Shanghai: Yesterday, concerns about the impact of subsequent maintenance at South China smelters resurfaced in the market, prompting traders to withhold sales again. Spot premiums rose significantly. However, with futures prices rising compared to the previous day, downstream enterprises largely remained on the sidelines, showing low willingness to inquire and purchase. Spot trades in the market were mainly among traders.

Guangdong: Affected by news of extended maintenance at South China smelters, the spot market was tight yesterday, with some traders facing shortages. Meanwhile, some traders had a strong wait-and-see attitude and low willingness to sell. The tight spot supply drove premiums and discounts higher.

Tianjin: With futures prices oscillating at a relatively high level, downstream enterprises were cautious in purchasing due to high prices, focusing mainly on restocking based on immediate needs. The implementation of new long-term contracts began, and downstream consumption declined somewhat. Overall demand was average. Yesterday, traders had a psychological tendency to refuse to budge on prices when offering quotes for sales, with premiums holding steady. Overall market transactions were average.

Ningbo: Imported zinc ingots continued to arrive, supplementing the supply in the Ningbo market. Yesterday, spot premiums in the market remained stable. However, some downstream enterprises had completed their raw material stocking in preparation for the Dragon Boat Festival holiday, while others still maintained purchases based on immediate needs. Spot transactions were average.

Social Inventory: On May 27, LME zinc inventory decreased by 2,350 mt to 151,150 mt, a decline of 1.53%. 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 1,600 mt from May 22, indicating a decline in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a long lower shadow and a large bearish candlestick. Pressured by the strengthening of the US dollar and the uncertainty surrounding the US tariff outlook, non-ferrous metals generally declined, with LME zinc also falling and its price center pulling back. Overnight, the SHFE zinc contract recorded a small bullish candlestick. From a fundamental perspective, the market had largely absorbed the news of an extended maintenance period at a smelter in South China. However, consumption remained resilient, and SHFE zinc mainly consolidated. It is expected to continue oscillating today.