Macro sentiment improves, LME zinc rises [SMM Morning Meeting Summary]

Futures Market: Overnight, LME zinc opened at $2,644.5/mt. Early in the session, LME zinc briefly dipped to a low of $2,628/mt before bulls increased their positions, driving the price up throughout the session to a high of $2,690/mt near the close. It eventually closed up at $2,686/mt, gaining $37/mt or 1.40%. Trading volume increased to 12,083 lots, while open interest rose by 1,944 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2508 contract opened at 21,875 yuan/mt. Early in the session, SHFE zinc consolidated along the daily moving average before bulls increased their positions, pushing the price up to a high of 22,030 yuan/mt. It eventually closed up at 21,995 yuan/mt, gaining 215 yuan/mt or 0.99%. Trading volume decreased to 95,930 lots, while open interest rose by 7,042 lots to 118,000 lots.

Macro: Trump: Israel and Iran have reached a full agreement to achieve a comprehensive ceasefire; Iran attacked the US airbase in Qatar, and Trump thanked them for the advance notice; Bowman and Goolsbee both hinted that if inflationary pressures are contained, they would support an interest rate cut in July; the EU plans to approve the 18th round of sanctions against Russia this week; MIIT and eight other departments: Aim to increase gold and silver production by over 5% by 2027; Li Qiang will attend the 16th Annual Meeting of the New Champions.

Spot Market:

Shanghai: With the monthly long-term contracts coming to an end, there was limited availability of domestically produced zinc ingots in the market yesterday. Some traders continued to refuse to budge on prices, and spot premiums remained relatively stable. However, downstream enterprises remained on the sidelines, maintaining just-in-time procurement, with overall trading mainly occurring among traders.

Guangdong: Overall, downstream consumption has been in the doldrums recently. Although the futures market declined slightly yesterday, enterprises' current restocking is mainly driven by just-in-time needs. Spot cargo transactions in the market were relatively average, and spot premiums continued to decline.

Tianjin: The futures market maintained a fluctuating trend, with weak downstream consumption and reduced production. Just-in-time procurement was the main focus, with low purchasing enthusiasm. Traders continuously lowered premiums to facilitate sales, resulting in weak overall market transactions.

Ningbo: As the month-end approaches, traders in the market are actively selling. The futures market maintained a fluctuating trend, and traders continued to lower their spot premium quotes yesterday. However, downstream enterprises continued to restock based on just-in-time needs, with no further improvement in overall spot cargo transactions.

Social Inventory: On June 23, LME zinc inventory fell by 325 mt to 125,900 mt, a decrease of 0.26%. According to SMM communications, as of Monday (June 23), the total zinc ingot inventory across seven locations tracked by SMM was 77,800 mt, a decrease of 1,000 mt from June 16 and a decrease of 1,800 mt from June 19, indicating a decline in domestic inventory.

Zinc Price Outlook: Overnight, LME zinc recorded a bullish candlestick. Iran has accepted the ceasefire proposal, reducing geopolitical conflict risks. Additionally, US Fed officials made dovish remarks, causing the US dollar to pull back and zinc prices to rise on the positive sentiment. Overnight, SHFE zinc recorded a large bullish candlestick, retracing to the 20-day moving average. Production at some smelters in South China was affected by heavy rain, but this did not change the trend of easing supply. Consumption weakened. The fundamentals were weak, putting pressure on zinc prices. However, the pace of inventory buildup fluctuated, and SHFE zinc fluctuated upward.