Macro uncertainties coupled with weak domestic fundamentals led to mixed performance of zinc prices on SHFE and LME this week [SMM Market Review - Weekly Price Review]

LME zinc: At the beginning of the week, LME zinc continued the fluctuating trend from the previous week. Subsequently, foreign media reported that Iran was seeking talks with the US and Israel to end hostilities, and Trump also indicated a temporary suspension of sanctions against Russia. Market sentiment improved, and LME zinc prices continued to rise. However, the situation in the Middle East remained tense, with unclear subsequent developments, causing LME zinc to maintain a fluctuating trend amid uncertainty. Then, as overseas zinc inventories continued to decline, providing some support to zinc prices, LME zinc edged higher. However, due to market concerns about the upcoming May retail sales data, LME zinc subsequently pulled back. Later, US retail sales in May fell short of expectations, but consumer spending remained supported by robust wage growth, causing the US dollar index to rise continuously, and LME zinc to drop back slightly. Subsequently, the US dollar index first fell and then rose before the US Fed announced its interest rate decision, causing LME zinc to rise and then pull back. Affected by the risk-averse sentiment in the market due to the situation in the Middle East, LME zinc edged higher again. Then, the US Fed indicated that it would continue to keep interest rates unchanged, causing LME zinc to decline. As of 15:00 on Thursday this week, LME zinc closed at $2,615/mt, down $11/mt or 0.44%.

SHFE zinc: At the beginning of the week, SHFE zinc declined slightly. Subsequently, foreign media reported that Iran was seeking talks with the US and Israel to end hostilities. Amid the relatively tense situation, market sentiment eased slightly due to the news, and SHFE zinc continued to rise driven by market sentiment and the LME market. Then, as the US dollar index first fell and then rose before the US Fed announced its interest rate decision, SHFE zinc continued to rise under the influence of the LME market and the US dollar index. However, the trend of expanding supply and weakening demand in the domestic fundamental landscape remained unchanged. Meanwhile, amid the tense situation in the Middle East, SHFE zinc maintained a fluctuating trend. Subsequently, LME zinc opened lower with a gap and maintained a fluctuating trend under the influence of the LME market. Later, the US Fed continued to keep interest rates unchanged in its interest rate decision. Meanwhile, according to SMM data, as of Thursday this week, SMM zinc ingot inventories across seven locations were recorded at 79,600 mt, with domestic inventories continuing to increase. SHFE zinc continued to decline. As of 15:00 on Thursday this week, SHFE zinc closed at 21,865 yuan/mt, up 50 yuan/mt or 0.23%.

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