Optimistic sentiment has not yet faded, with zinc prices fluctuating at highs [SMM Morning Meeting Summary]

Zinc Morning Meeting Notes on July 23

Futures Market: Overnight, LME zinc opened at $2,844/mt. Initially, LME zinc fluctuated near the daily average line. During European trading hours, bears increased their positions, pushing the center of LME zinc below the daily average line, with a low of $2,823/mt. Entering the night session, bulls increased their positions, driving LME zinc to rally rapidly and touch a high of $2,863/mt. It eventually closed up at $2,853.5/mt, with a gain of $9/mt or 0.32%. Trading volume decreased to 13,540 lots, while open interest increased by 837 lots to 185,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,850 yuan/mt. Initially, SHFE zinc consolidated near the daily average line. Subsequently, bulls surged in, pushing SHFE zinc to rally and touch a high of 23,020 yuan/mt. It eventually closed up at 22,970 yuan/mt, with a gain of 110 yuan/mt or 0.48%. Trading volume decreased to 76,490 lots, while open interest increased by 818 lots to 135,000 lots.

Macro: Bessent: August 1 is a "relatively firm deadline"; A forged resignation letter from Powell circulated on social media; Trump considers eliminating capital gains tax on home sales; Japanese Prime Minister Ishiba's approval rating falls to a new low; Li Qiang signs a State Council decree, announcing the "Regulations on Rural Roads"; SAFE: There is no obvious unilateral expectation for the appreciation or depreciation of the RMB in the current market.

Spot Market:

Shanghai: The absolute highs in the futures market suppressed downstream buying sentiment. Yesterday's spot transactions remained sluggish, with spot premiums struggling to rise. Overall trading was mainly among traders.

Guangdong: There was a discount of 30 yuan/mt against Shanghai spot. Overall, zinc prices maintained a high-level fluctuation yesterday. Downstream buying enthusiasm remained low, with most transactions being for long-term contracts. Market transactions were sluggish. Meanwhile, Guangdong's inventory increased slightly yesterday. Under these circumstances, spot premiums and discounts continued to decline.

Tianjin: Tianjin reported a discount of about 40 yuan/mt against Shanghai. The futures market continued to fluctuate at highs. Downstream buyers were cautious due to high prices. Coinciding with the end of long-term contracts, some enterprises focused on pricing later. Trader quotes were chaotic, with extreme prices appearing. Overall premiums showed a downward trend. There were a few transactions among traders, with overall trading being poor.

Ningbo: There was a premium of 10 yuan/mt against Shanghai spot. The futures market continued to fluctuate at highs. Yesterday, traders were relatively passive in selling. Spot premium quotes remained stable, but downstream buyers were still cautious due to high prices, maintaining just-in-time demand. Spot transactions did not improve.

Social Inventory: On July 22, LME zinc inventory decreased by 1,625 mt to 116,600 mt, a decline of 1.37%. According to SMM's communication, as of July 21, the total zinc ingot inventory in SMM's seven regions was 92,700 mt, a decrease of 400 mt from July 14 and a decrease of 800 mt from July 17. Domestic inventory recorded a decrease.

Zinc Price Forecast: Overnight, LME zinc recorded a four-day winning streak, with the daily candlestick's center moving upwards. Amid escalating trade tensions and conflicts between the White House and the US Fed, the US dollar continued to decline, leading to a general rise in non-ferrous metals. Additionally, LME zinc inventory decreased again, with bulls mainly increasing their positions, resulting in zinc prices maintaining their strength. Overnight, SHFE zinc recorded a five-day winning streak, with the KDJ indicator expanding upwards. The optimistic sentiment in the overnight market continued to ferment, with the State Council issuing regulations on rural roads, boosting demand expectations. Zinc prices are expected to fluctuate at highs.

Data Source Disclaimer: 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.