Uncertainty in demand and trade prospects casts a shadow over zinc prices [SMM Morning Meeting Summary]

Zinc Morning Meeting Summary on June 13

Futures Market: Overnight, LME zinc opened at $2,654/mt. Early in the session, LME zinc moved higher along the daily average line, with the center rising to around $2,670/mt and hitting a high of $2,673/mt. Subsequently, as bulls took profits and exited the market, the center of LME zinc moved lower to around $2,640/mt. It eventually closed down at $2,644/mt, down by $7/mt or 0.26%. Trading volume increased to 99,060 lots, while open interest decreased by 1,890 lots to 207,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,000 yuan/mt. After a rapid decline early in the session, bears took profits and exited the market, leading to a "V"-shaped reversal in SHFE zinc. The center rose above the daily average line, and it eventually closed down at 22,030 yuan/mt, down by 25 yuan/mt or 0.11%. Trading volume decreased to 65,082 lots, while open interest increased by 753 lots to 122,000 lots.

Macro: The US announced a tariff hike on steel home appliances starting from the 23rd; US media: Israel may launch an attack on Iran as early as Sunday; US initial jobless claims exceed expectations, while core PPI falls short; Trump lashes out at Powell, calling for a 200 basis point interest rate cut; It is said that most G7 countries plan to bypass Trump and lower the price cap on Russian oil; Trump claims that the US and China have reached an agreement, with the Foreign Ministry responding.

Spot Market:

Shanghai: Recently, imported zinc ingots have continued to flow in, and traders' spot premium quotes have continued to decline. However, downstream enterprises had built up certain inventories by purchasing at low prices earlier. With the futures market maintaining a fluctuating trend yesterday, enterprises' enthusiasm for purchasing was low, and market transactions were mediocre.

Guangdong: It offers a premium of 20 yuan/mt against Shanghai spot. Overall, the futures market maintained a fluctuating trend yesterday. Downstream enterprises had already restocked a small amount at low prices. Although overall market transactions remained relatively mediocre, some traders reported a slight improvement in spot transactions compared to the previous day, with spot premiums rising slightly.

Tianjin: It is quoted at a discount of around 30 yuan/mt against the SHFE market. With the futures market fluctuating, downstream enterprises' procurement enthusiasm was low, and they mainly restocked based on immediate needs. Coupled with the widening price spread between futures contracts, many traders had delivery plans. Premiums remained stable, with traders mainly engaging in transactions. Overall, market transactions were weak.

Ningbo: It offers a premium of 40 yuan/mt against Shanghai spot quotes. Yesterday, Qilin zinc ingots arrived in the Ningbo market. In the morning session, market traders' quotes remained stable, but the market continued to be bearish on premiums. Downstream enterprises maintained their immediate needs, and with poor sales, some traders lowered their own premium quotes. Overall, transaction performance was average.

Social Inventory: On June 12, LME zinc inventory decreased by 550 mt to 132,025 mt, a decline of 0.41%. According to communication with SMM, as of June 12, the total zinc ingot inventory across seven locations tracked by SMM was 77,100 mt, a decrease of 2,200 mt from June 5 and a decrease of 4,600 mt from June 9. Domestic inventory recorded a decrease.

Zinc Price Forecast: Overnight, LME zinc recorded a small bearish candlestick, with the daily candlestick's center slightly sinking. Although data showed a cooling in US employment and inflation, expectations for US Fed interest rate cuts increased. However, with the resurgence of tariff trade disputes, uncertainties in the economic outlook have intensified, and LME zinc is in the doldrums. Overnight, SHFE zinc recorded a small bullish candlestick, but it was suppressed by the 5-day moving average above. Overnight, zinc prices were in the doldrums, with uncertainties in trade and demand prospects casting a shadow over the market. Bearish funds remain strong, and the center of zinc prices has shifted downward.