Bulls increased their positions, and LME zinc recorded a five-day winning streak [SMM Morning Meeting Summary]

Zinc Morning Meeting Notes on July 24

Futures Market: Overnight, LME zinc opened at $2,858/mt. Initially, LME zinc extended its downward fluctuation along the daily average line, reaching a low of $2,842/mt. Subsequently, bulls increased their positions, driving LME zinc to fluctuate upward, touching a high of $2,875/mt during the night session. It finally closed up at $2,860/mt, gaining $6.5/mt or 0.23%. Trading volume decreased to 10,757 lots, while open interest increased by 3,299 lots to 188,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 23,000 yuan/mt. During the session, SHFE zinc fluctuated around the daily average line, with the center slightly moving downward at the end of the session. The fluctuation range did not exceed 100 yuan/mt. It finally closed up at 22,940 yuan/mt, gaining 35 yuan/mt or 0.15%. Trading volume decreased to 57,871 lots, while open interest decreased by 1,889 lots to 136,000 lots.

Macro: It is reported that the US benchmark tariff on EU goods is 15%; the US and Japan have reached a trade agreement with a tariff rate of 15% for Japan; most countries may face simple tariffs ranging from 15% to 50%; Bessent: Trump has already said that he will not fire Powell; White House officials: The Trump administration has not denied that Trump is on the Epstein list; Zelensky's weakening of the independence of anti-corruption institutions has sparked public protests; He Lifeng will travel to Sweden to hold economic and trade talks with the US side.

Spot Market:

Shanghai: Recently, the volume of zinc ingot in circulation in the Shanghai market has been limited. Some traders have shown a certain reluctance to budge on prices. However, low-priced zinc ingot from factories has continued to flow into east China, and downstream enterprises prefer to purchase low-priced zinc ingot from factories. Overall, spot trades in Shanghai have been sluggish, and spot premiums and discounts have remained in the doldrums.

Guangdong: It has a premium of 10 yuan/mt against Shanghai spot. Overall, zinc prices continued to fluctuate yesterday. Downstream enterprises currently have fewer orders, and purchasing demand is weak. Market transactions are sluggish. However, traders' quotations are basically flat compared to the previous day, and spot premiums remain unchanged.

Tianjin: Tianjin market is quoted at a discount of about 40 yuan/mt against Shanghai. The futures market continues to fluctuate at highs, and downstream enterprises are cautious about purchasing due to high prices. As long-term contracts are about to end, some enterprises focus on pricing later. Traders' quotations are chaotic, with extreme prices appearing. Overall, premiums show a downward trend, and there is a small volume of transactions among traders, with overall transactions being poor.

Ningbo: It has a premium of 20 yuan/mt against Shanghai spot. Recently, there have been few traders shipping zinc ingot in the Ningbo market, and spot premiums continue to hold steady. However, the futures market is holding up well, and downstream enterprises are cautiously waiting due to high prices. Spot transactions have been poor.

Social Inventory: On July 23, LME zinc inventory decreased by 1,275 mt to 115,325 mt, a decrease of 1.09%. According to SMM communication, as of July 21, the total zinc ingot inventory in seven regions tracked by SMM was 92,700 mt, an increase of 400 mt compared to July 14 and a decrease of 800 mt compared to July 17. Domestic inventory recorded a decrease.

Zinc Price Forecast: Overnight, LME zinc recorded a five-day winning streak, with various moving averages below providing support and the upper Bollinger Bands forming resistance. Recently, the US has reached trade agreements with multiple countries, and Sino-US trade negotiations have also been scheduled, leading to a cooling of market risk aversion. LME inventory continues to decline, with bullish funds mainly increasing their positions, and zinc prices remaining high. Overnight, SHFE zinc stopped rising and started to fall, with the KDJ indicator narrowing. Overnight, zinc prices briefly broke through 23,000 yuan/mt again, but lacked the strength to break higher. Market sentiment has somewhat eased, and zinc prices in the spot market are running weakly at a premium at high levels. Attention should be paid to the entry of hedging positions amid high 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.