Bulls took profits, with the center of SHFE zinc prices slightly declining [SMM Morning Meeting Summary]

Zinc Morning Meeting Notes on July 25

Futures Market: Overnight, LME zinc opened at $2,860/mt. Initially, LME zinc fluctuated along the daily average line. During European trading hours, it reached a high of $2,880/mt. As the night session approached, bears launched a high-level attack on LME zinc, causing it to decline continuously. The center of gravity moved down to $2,840/mt by the end of the session. It closed at $2,840.5/mt, down $19.5/mt or 0.68%. Trading volume decreased to 10,673 lots, while open interest increased by 327 lots to 188,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened lower with a gap at 22,850 yuan/mt. Initially, SHFE zinc traded below the daily average line, with the center of gravity fluctuating near 22,810 yuan/mt. It attempted to break above but failed. It closed at 22,810 yuan/mt, down 120 yuan/mt or 0.52%. Trading volume decreased to 8,423 lots, while open interest decreased by 1,883 lots to 37,024 lots.

Macro: The EU approved a €93 billion counter-tariff plan against the US; Trump demanded Powell cut interest rates in person; Trump supporters called for FOMC to hold public meetings; Clashes occurred in the disputed border area between Thailand and Cambodia; The ECB held steady, with Lagarde not ruling out future interest rate hikes; The SASAC of the State Council: Take the lead in resisting "rat race" competition; The PBOC will conduct 400 billion yuan in MLF operations today.

Spot Market:

Shanghai: The futures market continued to fluctuate at highs. Downstream firms purchased based on immediate needs, and buying sentiment remained sluggish. However, with spot premiums at low levels recently, some traders in the Shanghai market increased their purchasing sentiment. Overall, spot trades were mainly among traders.

Guangdong: It was trading at a discount of 40 yuan/mt against Shanghai spot. Overall, inventory in Guangdong increased slightly yesterday, and there was still a large amount of spot cargo circulating in the market. However, downstream buying sentiment remained low amid high prices and weak demand. Traders continued to lower prices for spot cargo of some non-delivery brands. Spot premiums fell yesterday.

Tianjin: It was trading at a discount of around 50 yuan/mt against Shanghai. The futures market continued to fluctuate at highs. Downstream firms mainly restocked based on immediate needs or consumed inventory. Traders' quotes were mixed, and overall premiums showed a downward trend. There were a few spot trades among traders, and overall trading was poor.

Ningbo: It was trading at a premium of 0 yuan/mt against Shanghai spot. Recently, with the futures market continuing to fluctuate at highs, some traders continued to lower spot quotes for the purpose of selling. Premiums and discounts continued to decline, but downstream firms remained cautious in purchasing. Overall, spot trades remained based on immediate needs.

Social Inventory: LME zinc inventory increased by 1,575 mt to 116,900 mt on July 24, up 1.73%. According to SMM communication, as of July 24, the total zinc ingot inventory in seven locations tracked by SMM was 98,300 mt, an increase of 4,700 mt from July 17 and 5,600 mt from July 21. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, LME zinc stopped rising and started to fall, with the KDJ indicator narrowing. Overnight, LME zinc inventory increased, coupled with bears entering the market at high levels, causing the center of LME zinc to slightly decline. Overnight, SHFE zinc recorded a small bearish candlestick, with the 5-day moving average acting as resistance. Overnight, iron ore and alumina showed a strong trend, while optimism in other metal markets faded. Meanwhile, social inventory of zinc and weekly inventory at smelters both increased, causing the center of zinc price to move downward. Attention should be paid to the Sino-US trade negotiations next week.

Data Source Statement: Except for publicly available information, all 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.