Tariff disruptions continue, LME zinc declines slightly [SMM Morning Meeting Summary]

Futures Market:

Last Friday, LME zinc opened at $2,771/mt. In the early session, LME zinc rose slightly, then fluctuated around the daily average line, hitting a high of $2,785/mt. During the European trading session, LME zinc fell rapidly below the daily average line. Entering the night session, LME zinc fluctuated rangebound around $2,736/mt, hitting a low of $2,732/mt. It closed at $2,738/mt, down $39/mt or 1.40%. Trading volume decreased to 88,132 lots, while open interest increased by 1,737 lots to 193,000 lots. Last Friday, SHFE zinc opened at 22,225 yuan/mt. In the early session, longs reduced their positions, causing SHFE zinc to fall briefly below the daily average line to a low of 22,170 yuan/mt. Subsequently, shorts reduced their positions, pushing SHFE zinc above the daily average line to a high of 22,260 yuan/mt. Near the close, longs reduced their positions again, causing SHFE zinc to drop back slightly. It closed at 22,215 yuan/mt, down 165 yuan/mt or 0.74%. Trading volume decreased to 57,649 lots, while open interest decreased by 3,744 lots to 104,000 lots.

Macro:

Trump announced a 30% tariff on the EU and Mexico; Fed's Goolsbee: The latest tariff threats may delay interest rate cuts; The renovation of the Fed's headquarters has become a key issue in potentially unseating Powell; Putin reportedly urged Iran and the US to reach a "zero enrichment" nuclear deal, but Russia dismissed it as fake news; The application process for adjusting the catalog of innovative drugs covered by commercial insurance has been launched; The Ministry of Finance: Strengthen long-term performance assessments for state-owned commercial insurance companies; The pilot pre-review mechanism for IPOs on the STAR Market; "China's No. 1 Uranium" successfully produced and rolled off the production line, marking the "first barrel of uranium".

Spot:

Shanghai: Qilin zinc ingots arrived in the Shanghai market. At the end of the week, there were many traders selling goods, but with the futures market remaining at a high level, downstream enterprises were hesitant to purchase due to high prices, resulting in low purchase willingness. Poor trading led to a continued decline in spot premiums, with overall trading performance being average.

Guangdong: Overall, although zinc prices maintained a fluctuating trend last Friday, they remained at a relatively high level. Downstream procurement demand was low, and spot trading in the market remained poor, with spot premiums continuing to decline.

Tianjin: Last Friday, the futures market continued to rise. Downstream enterprises were hesitant to purchase due to high prices, and some just-in-time restocking was mainly based on spot pricing. Traders slightly lowered premiums to facilitate sales, with trading mainly among traders. Overall market trading was poor.

Ningbo: Over the weekend, Qilin, Hualian, and other zinc ingots were expected to arrive in the Ningbo market. Some traders continued to lower premium quotes to facilitate sales, but with the futures market remaining at a high level and downstream orders being poor, overall trading did not improve.

Social Inventory: On July 11, LME zinc inventory decreased by 350 mt to 105,250 mt, a decline of 0.33%. According to SMM communication, as of Thursday (July 10), the total zinc ingot inventory across seven locations tracked by SMM was 90,300 mt, an increase of 7,200 mt from July 3 and an increase of 1,200 mt from July 7, indicating an increase in domestic inventory.

Zinc Price Forecast: Last Friday, LME zinc recorded a bearish candlestick, with the upper Bollinger Bands track acting as resistance and the 20/60-day daily average providing support. Trump announced a 30% tariff on the EU and Mexico, while US Fed officials indicated that the latest tariff threats might delay an interest rate cut, causing the center of LME zinc to move downward. Last Friday, SHFE zinc also recorded a bearish candlestick, with the upper Bollinger Bands track acting as resistance and the 20/60-day daily average providing support. Affected by LME, SHFE zinc opened lower with a gap. Domestic anti-"rat race" competition policies improved domestic sentiment, but the current fundamental situation remains unchanged. Coupled with the potential delay of the US Fed's interest rate cut, it is expected that SHFE zinc will maintain a fluctuating trend.