Market concerns about the US economy ease, LME zinc's center moves lower [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Summary on May 29
Futures Market: Overnight, LME zinc opened at $2,712/mt, hitting the intraday high at the opening. Subsequently, as bulls reduced their positions, LME zinc fluctuated downward, dipping to a low of $2,673/mt during European trading hours. However, the downward momentum weakened, and LME zinc's price center rebounded to oscillate near the daily average line. It eventually closed down at $2,689/mt, down $20/mt or 0.74%. Trading volume decreased to 8,227 lots, while open interest fell by 1,301 lots to 208,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,340 yuan/mt. In the early session, SHFE zinc quickly surged to a high of 22,485 yuan/mt. With mixed long and short positions, SHFE zinc's price center pulled back below the daily average line, dipping to a low of 22,225 yuan/mt at the end of the session. It finally closed up at 22,235 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 65,429 lots, while open interest fell by 1,350 lots to 122,000 lots.
Macro: The EU has agreed to communicate with the US Secretary of Commerce and the US Trade Representative every other day. Trump criticized Wall Street for not understanding negotiations. The US Fed's meeting minutes indicated that the risks of rising unemployment and inflation have increased. Trump stated that the US-Iran nuclear deal could be reached "within the next few weeks" and warned Israel against attacking Iran. Hamas claimed to have reached an agreement with the US special envoy for Middle East affairs on the outline of a Gaza ceasefire. OPEC+ plans to use 2025 production as the benchmark for 2027 production. NVIDIA's Q1 revenue exceeded expectations, while data center revenue slightly fell short. Vice Premier He Lifeng of the State Council welcomed US financial institutions to actively participate in the construction and development of China's capital market. The Ministry of Foreign Affairs announced that China will implement a visa-free policy for Saudi Arabia, Oman, Kuwait, and Bahrain on a trial basis.
Spot Market:
Shanghai: The market's expectations for the impact of maintenance at smelters in South China have gradually been digested. Coupled with the continuous inflow of imported zinc ingots to supplement the market, spot cargo quotes from traders were adjusted downward MoM yesterday. However, as downstream companies had already completed their restocking for the Dragon Boat Festival holiday, and with futures prices continuing to rise compared to the previous day, enterprises remained on the sidelines. Spot trades were sluggish in the morning session.
Guangdong: Overall, due to the extended maintenance at some smelters, traders showed strong reluctance to budge on prices. However, some brands of spot cargo arrived yesterday, and some traders also received long-term contract shipments of Qilin zinc. This led to an increase in market supply. Additionally, the Shanghai-Guangdong price spread widened yesterday, dampening downstream purchasing sentiment. Traders faced difficulties in selling cargo during the second trading session, and spot premiums declined.
Tianjin: With futures prices fluctuating at a relatively high level and weak downstream demand, the willingness to restock ahead of the Dragon Boat Festival was not strong. Moreover, there was still a bearish sentiment, with restocking mainly driven by immediate needs. Traders continuously lowered premiums to facilitate sales, resulting in poor overall market transactions.
Ningbo: Yesterday, the volume of spot cargo shipped in the Ningbo market remained low. Domestic traders continued to refuse to budge on prices, and spot premiums held steady. However, downstream companies had previously purchased low-priced imported zinc ingots and had built up certain inventories. As a result, market transactions were sluggish yesterday.
Social inventory: On May 28, LME zinc inventory fell by 7,700 mt to 143,450 mt, a decrease of 5.09%. According to communication with SMM, 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. Domestic inventory recorded a decline.
Zinc price outlook: Overnight, LME zinc recorded a bearish candlestick with no upper shadow. Market pessimism about the US economy decreased, the US dollar strengthened, and non-ferrous metals came under pressure. LME zinc was under pressure and moved lower, with its center pulling back. Overnight, SHFE zinc recorded a small bearish candlestick. Consumption expectations weakened somewhat, while expectations of a zinc ingot surplus remained. SHFE zinc was in the doldrums, awaiting more macro guidance. It is expected to continue oscillating today.