Data performance is mixed; LME zinc records a bearish candlestick [SMM Morning Meeting Summary]

Futures Market:

Overnight, LME zinc opened at $2,654.5/mt. Early in the session, LME zinc prices continuously declined below the daily moving average, then rapidly rose to a high of $2,662.5/mt during European trading hours. Subsequently, LME zinc prices quickly pulled back, fluctuating considerably along the daily moving average during the night session. By the end of the session, LME zinc prices slightly declined, closing at $2,636.5/mt, down $23.5/mt or 0.88%. Trading volume decreased to 90,506 lots, while open interest decreased by 394 lots to 211,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 21,885 yuan/mt. Early in the session, SHFE zinc prices dipped to a low of 21,825 yuan/mt. Subsequently, as bears reduced their positions, SHFE zinc prices continuously rose above the daily moving average, reaching a high of 21,975 yuan/mt. Then, as bulls reduced their positions, SHFE zinc prices fluctuated downward. The contract closed up at 21,910 yuan/mt, up 5 yuan/mt or 0.02%. Trading volume decreased to 47,302 lots, while open interest decreased by 2,898 lots to 103,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10/60-day moving averages exerting downward pressure.

Macro:

Trump: No immediate action to remove Iran's Supreme Leader; Trump: Drug tariffs are coming; Fed's mouthpiece: The Fed would have been prepared to cut interest rates this week if not for the risks posed by tariffs to prices; US Senate passes stablecoin bill; Summer Davos Forum to be held in Tianjin.

Spot:

Shanghai: With the delivery of the SHFE zinc 2506 contract completed, the market expects subsequent premiums to decline. Sellers actively shipped goods yesterday, but the futures market slightly rebounded, causing downstream enterprises to adopt a wait-and-see attitude again. Purchase transactions showed mediocre performance. Traders continued to lower their premium quotes to facilitate shipments. With the subsequent outflow of warrants, premiums may continue to weaken.

Guangdong: Overall, affected by the current weakening downstream demand, traders are finding it difficult to ship goods, and the reported premiums and discounts continue to decline. Meanwhile, due to the slight increase in the futures market yesterday and the market's expectation of loose subsequent spot supply, there are many traders shipping goods in the market. Yesterday, the Guangdong market saw a contract rollover, with the corresponding contract changing from the 2507 contract to the 2508 contract.

Tianjin: The futures market mainly fluctuated, with downstream enterprises mainly restocking based on immediate needs and holding a bearish view on premiums. Traders continuously lowered premiums to facilitate shipments, causing premiums to continue to pull back. Overall, market transactions were weak.

Ningbo: Domestically produced zinc ingots arrived normally during the week, while imported zinc ingots continued to impact the market at low prices, resulting in an abundant overall supply. Downstream enterprises purchased goods on demand, and spot premiums in Ningbo continued to decline yesterday.

Social Inventory: On June 17, LME zinc inventory decreased by 1,350 mt to 128,875 mt, a decline of 1.04%. According to SMM communications, as of Monday (June 16), the total zinc ingot inventory across seven locations tracked by SMM was 78,100 mt, a decrease of 3,600 mt from June 9 and an increase of 1,000 mt from June 12. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, the LME zinc recorded a bearish candlestick, with the 20/60-day moving averages above exerting pressure. US retail sales in May fell short of expectations, but consumer spending remained supported by robust wage growth. The US dollar index initially declined before rebounding. Meanwhile, tensions between Iran and Israel persisted, causing the center of LME zinc prices to shift higher and maintain a fluctuating trend. Overnight, SHFE zinc recorded a bullish candlestick, with the 10/60-day moving averages above exerting pressure. Affected by the seasonal off-season in consumption, current downstream demand is gradually weakening, reducing support for zinc prices. The market still anticipates an increase in supply. Tensions between Iran and Israel remain high. Subsequent attention should be paid to more macroeconomic news. It is expected that SHFE zinc will maintain a doldrums in the short term.