Easing tensions coupled with supply-side disruptions led to a continuous upward trend in zinc prices on both SHFE and LME this week [SMM Market Review - Weekly Price Review]

LME zinc: At the beginning of the week, LME zinc maintained the fluctuating trend of the previous week. Subsequently, Trump indicated that Israel and Iran had reached a complete agreement and would achieve a comprehensive ceasefire. At the same time, some Fed officials hinted that if inflationary pressures were contained, they would support an interest rate cut in July. Market sentiment recovered due to the easing macro environment, and the expectation of an interest rate cut also supported the continuous upward movement of LME zinc. Then, Fed Chairman Powell stated that more time was needed before considering another interest rate cut. This resistant attitude towards a July interest rate cut drove the US dollar index slightly higher, causing LME zinc to decline. Subsequently, Trump again stated that he would hold talks with Iran next week, and the market currently has certain expectations that the Fed will soon resume its interest rate cut cycle. The US dollar index continued to decline, while on the fundamentals side, workers at a zinc smelter in Peru went on strike, and overseas inventories have been declining recently, creating uncertainties in the subsequent supply side. LME zinc then rose accordingly. This week, the center of LME zinc prices continued to move upward. As of 15:00 on Thursday this week, LME zinc recorded a price of $2,731.5/mt, an increase of $82.5/mt, or 3.11%.

SHFE zinc: At the beginning of the week, from a fundamental perspective, downstream consumption had entered the seasonal off-season, and the support of end-use demand for prices weakened, causing SHFE zinc to decline slightly. Subsequently, according to SMM data, as of Monday this week, SMM's seven-region zinc inventory recorded 77,800 mt. Due to a decrease in arrivals in some regions, domestic inventories decreased, providing some support for zinc prices, and SHFE zinc rose slightly. Then, driven by the easing of international local disputes, LME zinc rose. The improvement in market sentiment and the rise in LME zinc jointly drove the upward movement of domestic SHFE zinc. However, although international macro sentiment eased, under the relatively weak domestic consumption, there was still certain resistance to the rise in SHFE zinc, and SHFE zinc maintained a fluctuating trend. Subsequently, Trump stated that he would hold talks with Iran next week, and the US dollar index continued to decline. On the fundamentals side, workers at a zinc smelter in Peru launched a strike, and overseas inventories continued to decrease. Multiple factors jointly drove SHFE zinc to rise continuously. This week, the center of SHFE zinc prices also moved upward continuously. As of Thursday this week, SHFE zinc recorded a price of 22,240 yuan/mt, an increase of 565 yuan/mt, or 2.61%.

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