LME zinc jumped initially and then pulled back overnight. Pay attention to inventory changes of LME [SMM Morning Meeting Summary]

Zinc Morning Meeting Notes on August 6

Futures: Overnight, LME zinc opened at $2,749/mt. After a brief consolidation around the daily average line at the start of the session, LME zinc fluctuated upward above the daily average line amid long entry and short covering. It reached $2,782.5/mt during European trading hours before bears struck at high levels, causing it to decline all the way. It eventually closed lower at $2,750/mt, down $4/mt or 0.15%. Trading volume decreased to 7,339 lots, and open interest increased by 144 lots to 191,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,360 yuan/mt. Bears increased their positions at the start of the session, pushing SHFE zinc lower all the way. Subsequently, the center ran around 22,300 yuan/mt. It eventually closed lower at 22,300 yuan/mt, down 15 yuan/mt or 0.07%. Trading volume decreased to 35,389 lots, and open interest increased by 641 lots to 99,113 lots.

Macro: Trump previewed a series of major tariff moves; US non-manufacturing PMI for July unexpectedly declined; Trump: Vance most likely to be the next presidential candidate; New Fed Chairman may be announced soon.

Spot Market:

Shanghai: Yesterday's futures rebounded from the previous day, causing downstream buying sentiment to deteriorate again. Traders faced difficulties in selling their cargoes, and spot premiums continued to decline. Downstream enterprises remained on the sidelines, and overall trading was dominated by traders.

Guangdong: It was at a discount of 30 yuan/mt to Shanghai spot. The Shanghai-Guangdong price spread remained unchanged. Overall, yesterday's futures rose somewhat, causing downstream purchasing enthusiasm to decline. The number of enterprises inquiring about prices decreased, and it was difficult to sell spot cargoes. Affected by this, traders continuously lowered premiums and discounts to sell their cargoes, but market transactions remained average, and spot premiums and discounts declined.

Tianjin: It was quoted at a discount of around 20 yuan/mt to Shanghai. Futures rebounded, and downstream enterprises were cautious about purchasing at high levels, with a small amount of rigid demand. Some enterprises restocked the day before yesterday, and overall restocking willingness was not strong yesterday. Traders slightly lowered premiums to sell their cargoes, and overall transactions were weaker than the previous day.

Ningbo: There were not many traders selling cargoes in Ningbo yesterday. Futures rose slightly, and downstream enterprises had a certain amount of inventory from previous purchases. Yesterday, wait-and-see sentiment was strong, and purchases were basically for rigid demand. Market premiums remained stable.

Social Inventory: LME zinc inventory decreased by 4,725 mt to 92,275 mt on August 5, a decline of 4.87%. According to SMM communication, as of August 4, the total zinc ingot inventory in seven regions tracked by SMM was 107,300 mt, an increase of 4,100 mt from July 31 and an increase of 3,600 mt from July 28. Domestic inventory increased.

Zinc Price Outlook: Overnight, LME zinc recorded a long upper shadow bullish candlestick, with the 5-day moving average forming resistance above and the 40-day moving average providing support below. Overnight, the US Institute for Supply Management (ISM) non-manufacturing purchasing managers' index (PMI) for July declined from 50.8 in June to 50.1, and the ISM new orders index fell from 51.3 to 50.3, indicating that the economy remains weak. LME zinc jumped initially and then pulled back. Overnight, SHFE zinc recorded a bearish candlestick, with the upper middle Bollinger Band forming resistance. The zinc price returned to the fundamental pattern of increased supply and weak demand, with bears mainly increasing their positions. The bottom support is temporarily seen at the integer level, and attention should be paid to changes in policy.

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.