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Macro Tariffs and Interest Rate Cut Expectations, Zinc Prices Maintained Fluctuating Trend This Week [SMM Market Review - Weekly Price Commentary]

iconJul 11, 2025 15:49
Source:SMM
[Macro tariffs coupled with interest rate cut expectations, zinc prices maintained fluctuating trend this week] At the beginning of the week, US President Trump announced new tariffs on a series of countries including Japan and South Korea effective August 1, reigniting macro tariff disputes. The US dollar index surged significantly, while the LME zinc center continued to pull back...

LME zinc: At the beginning of the week, US President Trump announced that new tariffs would be imposed on a series of countries, including Japan and South Korea, starting from August 1. This renewed macro tariff dispute led to a significant rise in the US dollar index, causing the center of LME zinc prices to continuously pull back. Subsequently, on the macro front, Trump indicated that a 50% tariff would be imposed on imported copper, while also urging the Fed Chairman to immediately cut interest rates. On the fundamentals side, overseas LME zinc inventory continued to decline, and overseas demand remained resilient, supporting the continuous upward movement of LME zinc prices. Then, according to the Fed meeting minutes, there were three factions within the Fed regarding interest rate cuts, while Trump continued to call for the Fed to cut interest rates. LME zinc prices continued to rise amid expectations for US Fed interest rate cuts. Subsequently, overseas zinc inventory continued to drop, and expectations for US Fed interest rate cuts persisted. Some officials indicated consideration for implementing interest rate cuts in the autumn and believed there would be two interest rate cuts this year. The combination of interest rate cut expectations and excessively low inventory caused the center of LME zinc prices to continue its upward trajectory. Subsequently, the market gradually absorbed expectations for interest rate cuts and disturbances from macro tariff policies, with LME zinc maintaining a fluctuating trend. As of 15:00 this Friday, LME zinc closed at $2,774.5/mt, up $39/mt, or 1.43%.

SHFE zinc: At the beginning of the week, influenced by Vietnam's recent initiation of anti-dumping tariffs on Chinese steel products, market sentiment was relatively low. Meanwhile, according to SMM social inventory data, as of Monday this week, domestic social inventory reached 89,100 mt, with inventory increasing again. Domestic consumption was generally in the doldrums, causing SHFE zinc to slightly decline under the influence of sentiment and fundamentals. Subsequently, Trump indicated that the Fed should immediately cut interest rates, while some Fed officials also believed that interest rate cuts should be prioritized. Under this influence, LME prices continued to rise, driving domestic SHFE zinc prices higher as well. Subsequently, positive macro news was released domestically. The National Development and Reform Commission's Urban and Small Town Reform and Development Center stated that it would use "implement major national strategies and build up security capacity in key areas" and "program of large-scale equipment upgrades and consumer goods trade-ins" funds as a starting point to increase investment in key areas of new-type urbanization. Amid expectations for the "shanty town renovation" policy, SHFE zinc continued to rise. Then, SHFE zinc resonated with LME zinc, also fluctuating continuously. As of 15:00 this Friday, SHFE zinc closed at 22,380 yuan/mt, down 30 yuan/mt, or 0.13%.

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