Macro and fundamental factors are in a tug-of-war, with zinc prices maintaining a fluctuating trend [SMM Morning Meeting Summary]

Zinc Morning Meeting Summary on June 11

Futures Market: Overnight, LME zinc opened at $2,649.5/mt. Initially, LME zinc fluctuated downward along the daily average line, reaching a low of $2,631/mt near the European trading session. Subsequently, the price center returned near the daily average line and rose to around $2,655/mt at the end of the session, closing up at $2,658.5/mt, up $4.5/mt or 0.17%. Trading volume decreased by 7,127 lots, and open interest decreased by 4,342 lots to 213,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 21,900 yuan/mt. Initially, SHFE zinc quickly touched a high of 21,965 yuan/mt. Subsequently, as bulls reduced their positions and exited, the price center moved below the daily average line. At the end of the session, it slightly recovered upward, closing up at 21,925 yuan/mt, up 55 yuan/mt or 0.25%. Trading volume decreased to 52,268 lots, and open interest decreased by 2,031 lots to 133,000 lots.

Macro: It is reported that India and the US are expected to reach a provisional trade agreement before month-end. The White House denied rumors that Treasury Secretary Bessent is a candidate for the next Fed Chairman. The EU proposed to lower the price cap on Russian oil to $45, and Putin announced an extension of countermeasures. Traders fully priced in two more interest rate cuts by the Bank of England this year. The Ministry of Human Resources and Social Security stated that it would implement the cancellation of household registration restrictions for flexible workers to participate in social insurance at their place of employment.

Spot Market:

Shanghai: Yesterday, the futures market declined significantly compared to the morning of the previous day. However, imported zinc ingots continued to be sold at low prices, and downstream enterprises priced more in the afternoon of the previous day. Yesterday, there was a strong wait-and-see sentiment, and trading volume deteriorated MoM. Overall, spot premiums struggled to rise.

Guangdong: It was at a discount of 10 yuan/mt against Shanghai spot. Overall, affected by the decline in the futures market, traders raised premiums for spot sales in the morning session. However, some downstream enterprises had already restocked the previous day. Amid weak trading, traders slightly lowered premiums again. However, premiums for some brands rose in the second session due to recent tight spot supply. Yesterday, the futures market maintained a fluctuating trend, with the price spread between futures contracts expanding, and spot premiums and discounts slightly increased.

Tianjin: It was reported at a discount of around 50 yuan/mt against the SHFE market. The futures market pulled back sharply, and some downstream enterprises restocked at low prices. However, as there was more pricing in the afternoon of the previous day, the restocking sentiment of downstream enterprises decreased yesterday. Premiums did not improve much, and traders' quotes remained stable. Overall, market trading was average.

Ningbo: It was at a premium of 0 yuan/mt against Shanghai spot. Imported zinc ingots continued to flow into Ningbo, and Jiulong zinc ingots also began to arrive. The overall supply in Ningbo was ample. To facilitate sales, traders continued to lower their premium quotes. Downstream enterprises purchased and restocked at low prices, and spot trading improved yesterday.

Social Inventory: On June 10, LME zinc inventory decreased by 1,050 mt to 134,550 mt, a decrease of 0.77%. According to SMM communications, as of June 9, the total zinc ingot inventory across seven locations tracked by SMM was 81,700 mt, an increase of 4,300 mt from June 3 and an increase of 2,400 mt from June 5. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, LME zinc prices stopped declining and returned to positive territory, with the lower band of the Bollinger Bands providing support. The preliminary agreement on the Geneva framework in the China-US trade negotiations has warmed macro sentiment, and zinc prices recorded a long lower shadow bullish candlestick. Overnight, SHFE zinc prices recorded a small bullish candlestick, with the 5-day moving average acting as resistance above and the lower band of the Bollinger Bands providing support below. Progress in the China-US trade negotiations has improved macro sentiment; however, the fundamentals do not provide sufficient support for zinc, so it is recommended to remain on the sidelines in the short term.