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The upcoming tariff deadline has sparked market concerns, leading to a decline in LME zinc [SMM Zinc Morning Meeting Summary]

iconJul 7, 2025 09:05
Source:SMM
[SMM Zinc Morning Meeting Summary: Market Concerns Arise as Tariff Deadline Approaches, LME Zinc Prices Fall]: Last Friday, LME zinc opened at $2,739.5/mt. With mixed bullish and bearish sentiments in the early session, LME zinc fluctuated upward, reaching a high of $2,757/mt during European trading hours. Subsequently, as bulls reduced their positions, LME zinc prices fluctuated downward throughout the day, hitting a low of $2,722.5/mt during the night session. It eventually closed at $2,735.5/mt, down by $2.5/mt or 0.09%. Trading volume decreased to 4,385 lots, while open interest fell by 883 lots to 206,000 lots.

SMM Zinc Morning Meeting Summary on July 7
Futures Market: On Friday, LME zinc opened at $2,739.5/mt. With mixed longs and shorts in the early session, LME zinc fluctuated upward, reaching a high of $2,757/mt during European trading hours. Subsequently, longs reduced their positions, causing LME zinc to fluctuate downward throughout the session, touching a low of $2,722.5/mt during the night session. It finally closed at $2,735.5/mt, down by $2.5/mt or 0.09%. Trading volume decreased to 4,385 lots, and open interest fell by 883 lots to 206,000 lots. On Friday, the most-traded SHFE zinc 2508 contract opened sharply lower at 22,340 yuan/mt. With longs continuing to reduce their positions in the early session, SHFE zinc declined throughout the session, touching a low of 22,225 yuan/mt. It finally closed higher at 22,240 yuan/mt, down by 170 yuan/mt or 0.76%. Trading volume decreased to 57,395 lots, and open interest fell by 1,726 lots to 126,000 lots.
Macro: Trump: May send 12 or 15 tariff-related letters on Monday; Several Trump administration officials hint that some trade negotiations may exceed the deadline; Trump signs the "Big and Beautiful" tax and spending bill; Musk announces the establishment of the "America Party," prompting Trump to blast it as "absurd"; US media: US Defense Secretary Hegseth once again suspends arms shipments to Ukraine on his own initiative; Israel and Hamas' first round of indirect ceasefire negotiations in Qatar end without results; OPEC+ agrees to increase production in August; The Ministry of Finance decides to take relevant measures against some medical devices imported from the EU in government procurement activities; The Ministry of Housing and Urban-Rural Development: More efforts will be made to promote the stabilization and recovery of the real estate market.
Spot Market:
Shanghai: At the end of the week, there were many traders offering goods in the market. The futures market remained at a high level, dampening buying sentiment. Downstream buyers maintained just-in-time procurement due to high prices, resulting in sluggish spot transactions and a subsequent pullback in spot premiums.
Guangdong: Overall, downstream consumption in Guangdong is currently sluggish. Meanwhile, with zinc prices maintaining a fluctuating trend, downstream procurement enthusiasm is low, mostly for just-in-time procurement based on sales. Traders lowered premiums to facilitate sales, but transactions remained relatively average. Spot premiums in Guangdong continued to decline on Friday.
Tianjin: On Friday, the futures market maintained a fluctuating trend. Affected by heavy rain, downstream operations in Tianjin were disrupted, leading to poor buying sentiment. A small number of enterprises restocked based on just-in-time needs. Traders' quotes remained basically stable, but overall market transactions were poor.
Ningbo: On Friday, traders' quotes in Ningbo remained basically stable. The futures market maintained a fluctuating trend, and downstream demand for raw materials remained mediocre, resulting in mediocre spot transactions.
Social Inventory: On July 4, LME zinc inventory decreased by 350 mt to 112,325 mt, a decrease of 0.31%. According to SMM communication, as of Thursday (July 3) this week, the total zinc ingot inventory in seven locations tracked by SMM was 82,400 mt, an increase of 2,900 mt from June 26 and an increase of 1,800 mt from June 30. Domestic inventory recorded an increase.
Zinc Price Forecast: On last Friday, LME zinc recorded a small bearish candlestick, with market focus shifting to the July 9 deadline for tariffs. After this date, the US will impose tariffs on countries that have not yet been charged, sparking market concerns and leading to a decline in LME zinc prices. On the same day, SHFE zinc also recorded a small bearish candlestick. Amidst poor domestic consumption, there was a certain degree of inventory buildup in social inventory. The domestic expectation of inventory buildup fluctuated, but the relatively low social inventory of zinc ingots continued to provide support for zinc ingot prices. It is expected that SHFE zinc will mainly consolidate with fluctuations today.

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