Tariff Uncertainty Persists, LME Zinc Price Center Moves Down [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Summary on May 30
Futures Market: Overnight, LME zinc opened at $2,685.5/mt. Initially, LME zinc consolidated along the daily moving average before bulls increased their positions, driving LME zinc higher. It peaked at $2,728/mt during European trading hours. Subsequently, bears increased their positions, causing LME zinc to fluctuate downward throughout the session, bottoming out at $2,669.5/mt before closing at $2,670/mt, down $19/mt or 0.71%. Trading volume increased to 9,466 lots, while open interest rose by 3,084 lots to 211,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,450 yuan/mt. Initially, SHFE zinc quickly surged to a high of 22,465 yuan/mt. However, as bulls reduced their positions, the center of SHFE zinc prices pulled back below the daily moving average, bottoming out at 22,300 yuan/mt. It eventually closed at 22,365 yuan/mt, down 130 yuan/mt or 0.58%. Trading volume decreased to 70,875 lots, while open interest fell by 2,972 lots to 116,000 lots.
Macro: The US Court of Appeals allowed Trump's tariff policy to remain in effect temporarily; Trump administration officials expressed confidence in continuing the tariff policy; Trump met with Powell for the first time since taking office; US Q1 GDP growth was slightly revised upward; Kremlin: Putin has no immediate plans to engage in dialogue with Trump; The Ministry of Commerce responded to new developments in Sino-US economic and trade consultations, urging the US to completely eliminate unilateral tariff hikes; Domestic airlines' fuel surcharges will be reduced starting from June 5; The Hongdao Operating System, a national new-type industrialization operating system, was officially launched.
Spot Market:
Shanghai: Yesterday, traders in the Shanghai market continued to refuse to budge on prices, with a relatively high premium over the average price. Spot premiums remained stable. However, as the futures market maintained a fluctuating trend, the prices of some zinc ingots delivered from mills and shipped to customers were relatively low. Downstream buyers showed low purchase willingness for domestically produced self pick-up zinc ingots. Spot transactions remained driven by just-in-time procurement, with overall trading activity mainly among traders.
Guangdong: Overall, spot premiums in the Guangdong market are currently high, suppressing downstream procurement enthusiasm. Most purchases were for just-in-time procurement, resulting in relatively average spot transaction volumes.
Tianjin: The futures market continued to consolidate, failing to reach downstream buyers' psychological price levels. Downstream buyers mainly focused on just-in-time restocking, with weak restocking willingness ahead of the Dragon Boat Festival. Traders lowered premiums to facilitate sales, leading to poor overall market transactions.
Ningbo: Imported zinc ingots continued to flow into the Ningbo market at month-end. Domestic traders slightly lowered spot premiums to facilitate sales. Downstream buyers had largely completed their restocking for the Dragon Boat Festival. Yesterday, spot procurement remained driven by just-in-time needs, with transaction volumes still performing averagely.
Social Inventory: On May 29, LME zinc inventory fell by 2,075 mt to 141,375 mt, a decrease of 1.45%. According to SMM communications, as of Thursday (May 29), the total zinc ingot inventory across seven locations tracked by SMM was 75,000 mt, down 5,400 mt from May 22 and 3,800 mt from May 26, indicating a decrease in domestic inventory.
Zinc Price Forecast: Overnight, LME zinc recorded a long upper shadow bearish candlestick, with the 5/10-day daily average acting as resistance above. Affected by tariff uncertainties, it triggered market concerns, causing LME zinc to trade under pressure, with the center pulling back. Overnight, SHFE zinc recorded a small bearish candlestick. The reduction in domestic inventory still provided support for zinc prices, but tariff uncertainties persisted, coupled with gradually weakening consumption, causing SHFE zinc to trade under pressure. It is expected that SHFE zinc will continue to oscillate today.