Overnight, SHFE zinc recorded a bearish candlestick with no lower shadow. Attention should be paid to today's inventory performance [SMM Morning Meeting Summary].

Zinc Morning Meeting Summary on June 12

Futures Market: Overnight, LME zinc opened at $2,661/mt. Initially, LME zinc fluctuated upward along the daily average line, reaching a high of $2,692/mt during European trading hours. Subsequently, as bulls took profits and exited, LME zinc fluctuated downward, hitting a low of $2,647/mt at the end of the session. It finally closed at $2,651/mt, down $7.5/mt or 0.28%. Trading volume increased to 9,627 lots, while open interest decreased by 4,563 lots to 209,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, with the 5/40-day moving averages acting as resistance. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,100 yuan/mt. Initially, bulls reduced their positions, and SHFE zinc fell after a brief consolidation near the daily average line, with its center operating below the daily average line. It finally closed at the day's low of 22,000 yuan/mt, down 20 yuan/mt or 0.09%. Trading volume decreased to 48,580 lots, while open interest decreased by 226 lots to 126,000 lots.

Macro: US CPI data for May fell short of expectations across the board. Trump again called for the US Fed to cut interest rates by 100 basis points. Trump expressed "less confidence" in the Iran nuclear talks, and the US will reduce the size of its mission in Iraq. Bessent: The 90-day tariff suspension period can be extended beyond July 9 as long as there is "good faith." Musk regretted his post criticizing Trump, and Trump said reconciliation was possible but not a priority. Li Chenggang: China and the US have reached a framework for implementing the consensus reached in the phone call between the two heads of state and the Geneva talks.

Spot Market:

Shanghai: The futures market rebounded MoM. Zinc ingots from Spain, India, and Kazakhstan arrived in Shanghai one after another, supplementing the supply in the Shanghai market. However, downstream enterprises remained bearish on zinc prices, placing orders at lower levels. Overall, transactions were mainly among traders, and spot premiums in Shanghai continued to decline.

Guangdong: It was at a spot discount of 0 yuan/mt against Shanghai. Overall, driven by the previous decline in the futures market, downstream enterprises restocked at lower prices. However, with the futures market rising yesterday and some enterprises having already restocked for immediate needs, market purchasing sentiment waned. The spot trading atmosphere was average, and premiums declined.

Tianjin: Tianjin was at a spot discount of around 40 yuan/mt against Shanghai. The futures market rebounded slightly, and downstream purchasing enthusiasm was low, with restocking mainly for immediate needs. Traders continuously lowered premiums to facilitate sales, and premiums continued to decline. Trading was mainly among traders, and overall market transactions weakened.

Ningbo: It was at a spot premium of 20 yuan/mt against Shanghai. Recently, Kazakh zinc arrived in the Ningbo market, but premium quotes were not low. With the futures market experiencing a slight rebound, downstream enterprises maintained purchases for immediate needs, and overall spot transactions were average. Overall, premiums remained stable.

Social Inventory: On June 11, LME zinc inventory decreased by 1,975 mt to 132,575 mt, a decline of 1.47%. 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 2,400 mt from June 5. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a long upper shadow bearish candlestick, with the 5/40-day moving average acting as resistance above. Although the US CPI data came in lower than expected across the board overnight, raising market expectations for an interest rate cut, the international environment remains challenging. Moreover, the market is paying close attention to more details of the China-US negotiations, and LME zinc maintained a fluctuating trend. Overnight, the SHFE zinc recorded a bearish candlestick without a lower shadow, with the 10/40-day moving average acting as resistance above. Overnight, zinc prices maintained sideways movement, with a tug-of-war between longs and shorts in macro sentiment. On the fundamentals side, supply-side pressure increased, with imported zinc still arriving. Downstream consumption is in an off-season, but the previous low prices have stimulated downstream restocking demand. Attention should be paid to today's inventory performance, as there may be temporary support at the round-number level.