The increase in inventory, coupled with tariff disruptions, caused the center of LME zinc to pull back [SMM Morning Meeting Summary]

Futures Market:

Overnight, LME zinc opened at $2,748/mt, then reached a high of $2,746/mt. Subsequently, LME zinc declined slightly and consolidated around the daily average line. During European trading hours, LME zinc plunged below the daily average line, fluctuating rangebound around $2,720/mt, with a low of $2,711/mt. In the end, LME zinc recovered some losses and closed at $2,732.5/mt, down $5.5/mt or 0.20%. Trading volume increased to 112,000 lots, and open interest rose by 1,614 lots to 194,000 lots. Overnight, SHFE zinc opened at 22,110 yuan/mt. In the early session, SHFE zinc briefly fluctuated around the daily average line, with a low of 22,080 yuan/mt. Subsequently, bears reduced their positions, and SHFE zinc quickly rose above the daily average line, reaching a high of 22,195 yuan/mt. In the end, bulls reduced their positions, and SHFE zinc dropped back slightly, closing at 22,145 yuan/mt, down 105 yuan/mt or 0.47%. Trading volume decreased to 54,435 lots, and open interest decreased by 4,323 lots to 89,854 lots.

Macro: Trump threatened to impose a 100% tariff on Russia; Fed's Harkin said there was no urgent need for an interest rate cut at present; Powell called for a review of the renovation costs of the Federal Reserve building; the cumulative increase in social financing scale in the first half of 2025 was 22.83 trillion yuan; the PBOC conducted a 1,400 billion yuan outright reverse repo operation on the 15th; the deputy governor of the PBOC said China does not seek to gain international competitive advantages through currency depreciation.

Spot:

Shanghai: At the beginning of the week, there were many traders shipping goods in the Shanghai market. Although the futures market pulled back slightly compared to last week, downstream purchases remained rigid, and spot trading performance was average. Spot premiums continued to decline.

Guangdong: Overall, despite the decline in zinc prices MoM yesterday, the spot circulation volume in the Guangdong market remained high. Coupled with weak downstream consumption, market trading was relatively sluggish. Meanwhile, the price spread between futures contracts contracted yesterday, and spot premiums and discounts continued to decline.

Tianjin: Yesterday, the futures market pulled back significantly, and downstream enterprises conducted a small amount of restocking, but there was still a bearish sentiment. Traders slightly lowered premiums to facilitate shipments, and trading was dominated by traders. Overall, market trading was sluggish.

Ningbo: Traders in the Ningbo market continued to actively ship goods, and spot premiums remained low. However, downstream alloy plants had weak orders, and some plants were currently only operating at night. The demand for raw materials continued to decline. Under rigid restocking needs, spot trading performance was mediocre.

Social Inventory: On July 14, LME zinc inventory decreased by 350 mt to 105,250 mt, a decline of 0.33%. According to SMM communication, as of Monday (July 14), the total zinc ingot inventory in seven regions tracked by SMM was 93,100 mt, an increase of 4,000 mt from July 7 and an increase of 2,800 mt from July 10. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, LME zinc recorded a long lower shadow bearish candlestick, with the upper Bollinger Bands acting as resistance and the 40/60-day moving averages providing support below. The increase in overseas inventories weakened the support for LME zinc. Meanwhile, Trump stated that if Russia fails to reach an agreement on the Russia-Ukraine conflict within 50 days, a 100% secondary tariff will be imposed on Russia. The macro sentiment turned bearish, causing the center of LME zinc prices to decline. Overnight, SHFE zinc recorded a small bullish candlestick, with the 5/10-day moving averages acting as resistance and the 40/60-day moving averages providing support below. Influenced by LME, SHFE zinc opened lower with a gap. However, yesterday, the State Council Information Office held a press conference, stating that the cumulative increase in social financing scale for the first half of 2025 (H1) was 22.83 trillion yuan, achieving reasonable growth in the financial aggregate. The domestic market sentiment was relatively positive, leading to a slight upward movement in SHFE zinc prices.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market exchanges, and relying on SMM's internal database models. These data are for reference only and do not constitute decision-making advice.