US "Retail Sales" Data in June Showed Excellent Performance, with Divergent Changes in Zinc Prices on SHFE and LME [SMM Market Review - Weekly Price Review]

LME zinc: At the beginning of the week, from a macro perspective, Trump stated that if Russia fails to reach an agreement on the Russia-Ukraine conflict within 50 days, it will impose a 100% secondary tariff on Russia. On the fundamental side, overseas LME zinc inventory surged by 8,150 mt to 113,400 mt, and LME zinc continued to decline under the influence of macro disturbances and inventory buildup. Subsequently, the overall CPI for June in the US rebounded slightly, while the core CPI fell short of expectations. However, the mild inflation report might prompt the US Fed to temporarily maintain interest rates unchanged, and the US dollar index continued to rise, pushing LME zinc further down under the pressure of the US dollar. Then, influenced by rumors that Trump would fire Powell, market sentiment fluctuated greatly, and the US dollar index plunged during the trading session. Meanwhile, the US PPI for June hit a new low since September 2024, and the center of LME zinc continued to move lower. Subsequently, as the market continued to digest the recent series of data, LME zinc maintained a fluctuating trend. However, the EU planned to impose additional service tariffs and export controls on the US, coupled with the excellent performance of the US retail sales data for June, market sentiment was driven to recover, overshadowing tariff disturbances. At the same time, Trump once again called on the US Fed to cut interest rates, and the center of LME zinc moved upward. Then, LME zinc maintained a fluctuating trend. As of 15:00 this Friday, LME zinc closed at $2,750/mt, up $12/mt, with a gain of 0.44%.

SHFE zinc: At the beginning of the week, SHFE zinc extended last week's decline and edged lower. Subsequently, the State Council Information Office held a press conference, stating that the cumulative increase in the social financing scale for H1 2025 was 22.83 trillion yuan, achieving reasonable growth in the financial aggregate. The domestic market sentiment was relatively positive, and SHFE zinc edged upward slightly. However, domestic zinc inventory continued to build up, and overseas zinc inventory increased by 7.74% MoM, weakening the fundamental support for zinc prices, and SHFE zinc opened lower with a gap. Subsequently, SHFE zinc edged upward slightly. Then, due to the current situation of weak demand and widened supply in the domestic fundamentals, SHFE zinc continued to pull back. However, China's economy grew by 5.3% YoY in H1 and by 5.2% in Q2. As the market continued to digest the better-than-expected data performance, SHFE zinc stopped falling, stabilized, and edged upward slightly. Subsequently, the US "Retail Sales" data for June performed well, and SHFE zinc opened higher with a gap and continued to move upward under the influence of LME. However, domestic end-use consumption provided insufficient support for zinc prices, and domestic social inventory continued to build up slightly this week. Under these circumstances, SHFE zinc continued to decline after maintaining a brief fluctuating trend. As of 15:00 this Friday, SHFE zinc closed at 22,295 yuan/mt, down 60 yuan/mt, with a loss of 0.27%.