US "terror data" performs well, driving LME zinc's center upward [SMM Morning Meeting Summary]

Futures Market:

Overnight, LME zinc opened at $2,704.5/mt, then fluctuated upward along the daily average line. During the European trading session, LME zinc dipped to $2,686.5/mt, before continuously rising above the daily average line and touching a high of $2,740.5/mt. It eventually closed higher at $2,737.5/mt, up $38/mt or 1.14%. Trading volume decreased to 60,614 lots, while open interest increased by 103 lots to 187,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened higher with a gap at 22,175 yuan/mt. After opening, SHFE zinc dipped to 22,130 yuan/mt, before bulls increased their positions and SHFE zinc rose to touch a high of 22,370 yuan/mt. Subsequently, a tug-of-war between longs and shorts ensued, with SHFE zinc fluctuating rangebound around 22,350 yuan/mt. It eventually closed higher at 22,345 yuan/mt, up 225 yuan/mt or 1.02%. Trading volume decreased to 80,014 lots, while open interest increased by 4,323 lots to 109,000 lots.

Macro:

The EU plans to impose additional tariffs on US services and export controls; US Fed Governor Waller reiterated that interest rates should be cut in July; Trump again posted calling for the US Fed to cut interest rates; US housing director: lawmakers will accuse Powell of perjury; US retail sales in June hit a new high since March this year; the starting point for consumption tax on super luxury cars has been lowered to 900,000 yuan.

Spot:

Shanghai: Yesterday, zinc prices fluctuated mainly, with many traders offering goods for sale in the market. Downstream players, having built up certain inventories through purchases at lower prices earlier, continued to adopt a wait-and-see attitude yesterday. Overall transactions remained at just-in-time demand levels, with premiums continuing to weaken.

Guangdong: Overall, yesterday's futures market fluctuated upward, with trading remaining sluggish. Downstream purchases were mainly for just-in-time demand, and traders faced difficulties in selling goods. However, the price spread between futures contracts rose slightly yesterday, and spot premiums increased slightly.

Tianjin: Yesterday's futures market rebounded slightly. Downstream players, having restocked slightly at lower prices in the previous few days, showed weak purchasing sentiment yesterday. Traders' selling premiums and discounts pulled back slightly, and warrants will be released after delivery. Overall market transactions were weak.

Ningbo: Some traders completed their low-price dumping of goods the day before yesterday and did not offer spot quotes yesterday. Spot premiums in Ningbo rebounded slightly yesterday, but downstream orders were weak, and purchases were mainly made as needed. Spot transactions in the market were generally average yesterday.

Social Inventory: On July 17, LME zinc inventory increased by 125 mt to 121,475 mt, up 0.10%. According to SMM's communication, as of Thursday (July 17), the total zinc ingot inventory in seven locations tracked by SMM was 93,500 mt, an increase of 3,300 mt from July 10 and an increase of 500 mt from July 14. Domestic inventory recorded an increase.

Zinc Price Outlook: Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Bands acting as resistance and the 60-day moving average providing support. Overnight, the EU proposed to impose new tariffs on US services and export controls as a retaliatory measure after the breakdown of trade negotiations. Meanwhile, US retail sales in June recorded a 0.6% increase, higher than the previous value and expected value, with excellent data performance reaching a new high since March this year. Market sentiment was driven to recover, overshadowing the lobbying disturbances. Trump once again called on the US Fed to cut interest rates, and the center of LME zinc moved upwards. Overnight, SHFE zinc recorded a bullish candlestick, with the upper Bollinger Bands forming resistance and the 40/60-day daily average providing support below. Affected by LME, SHFE zinc opened higher with a gap, but the domestic fundamental situation remained unchanged. The impact of the off-season and the expectation of loose supply provided insufficient support for zinc prices to continue surging. Subsequent attention should still be paid to changes in macro sentiment. It is expected that SHFE zinc will continue to oscillate in the short term.

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