A new round of China-US trade negotiations begins, with zinc prices awaiting more macro guidance [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Summary on July 29

  Futures Market: Overnight, LME zinc opened at $2,833.5/mt. Early in the session, LME zinc reached a high of $2,843.5/mt, then fluctuated downward, hitting a low of $2,803/mt during the session. Subsequently, LME zinc surged again above the daily average line. Near the end of the session, LME zinc pulled back again, closing at $2,805/mt, down $23.5/mt or 0.83%. Trading volume increased to 9,331 lots, while open interest decreased by 1,902 lots to 189,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,645 yuan/mt. Early in the session, SHFE zinc oscillated around the daily average line, reaching a high of 22,725 yuan/mt during the session. Then, SHFE zinc fluctuated downward slightly. Near the end of the session, it hit a low of 22,640 yuan/mt, closing at 22,665 yuan/mt, up 20 yuan/mt or 0.09%. Trading volume decreased to 52,677 lots, while open interest decreased by 113 lots to 124,000 lots.

Macro: Trump believes that the US Fed must cut interest rates this week; Trump: Global tariffs will be around 15-20%; Trump considers giving Russia less than two weeks to reach a ceasefire agreement; Thailand and Cambodia reach a consensus on a ceasefire agreement; the US Treasury significantly raises its Q3 borrowing estimate; children under 3 years old can receive 3,600 yuan per year; the State Administration for Market Regulation: crack down on low-quality and low-price competition among enterprises in accordance with laws and regulations; the China-US economic and trade talks were held in Stockholm, Sweden.

Spot Market:

Shanghai: Yesterday, the futures market declined WoW. Market traders continued to refuse to budge on prices, maintaining a high premium over the average price. Spot premiums increased slightly, but factory-delivered zinc ingots continued to flow in. Downstream enterprises preferred to purchase low-priced factory-delivered zinc ingots. Coupled with the continued bearish sentiment among downstream enterprises, spot transactions remained mostly for rigid demand today.

Guangdong: There was a discount of 50 yuan/mt against Shanghai spot prices. Overall, the futures market continued to decline yesterday, but downstream purchase willingness remained low. Meanwhile, due to the arrival of the fruit and melon harvest season, freight rates in south China increased. Premiums for some brands rose in the second session. Traders had a strong reluctance to budge on prices, but actual transactions were poor. Overall, market transactions remained relatively sluggish yesterday, and spot premiums and discounts continued to decline.

Tianjin: Tianjin reported a discount of 50 yuan/mt against Shanghai spot prices. The futures market continued to be in the doldrums. Some downstream enterprises restocked slightly, but still maintained a wait-and-see attitude. Traders' quotes increased slightly, and some traders considered delivery. Overall, transactions were average.

Ningbo: There was parity with Shanghai spot prices. Entering a new long-term contract cycle, the futures market declined slightly. Yesterday, there were not many traders shipping goods in the Ningbo market. Some traders had a strong reluctance to budge on prices, and spot premiums continued to increase. However, downstream enterprises still maintained rigid demand, and overall transaction performance was average.

Social Inventory: On July 26, LME zinc inventory decreased by 275 mt to 115,500 mt, a decrease of 0.24%. According to SMM communication, as of July 28, the total zinc ingot inventory in seven regions tracked by SMM was 103,700 mt, an increase of 11,100 mt from July 21 and an increase of 5,400 mt from July 24. Domestic inventory recorded an increase.

Zinc Price Forecast: Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average providing support below. The US dollar index rose significantly, but the low LME zinc inventory still supported zinc prices. LME zinc consolidated and fluctuated. As a new round of China-US trade negotiations began, the market continued to await macro guidance. Overnight, SHFE zinc recorded a bullish candlestick, with the 20-day moving average providing support below. On Monday, SMM zinc ingot inventory continued to experience inventory buildup. The fundamentals provided weak support for zinc prices, but there were still positive macro expectations. SHFE zinc maintained a fluctuating trend.

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.