The market continues to wait for the inflation report, focusing on subsequent macro guidance [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Notes on August 12

Futures: Overnight, LME zinc opened at $2,826.5/mt. After opening, LME zinc fluctuated upward, reaching a high of $2,846.5/mt. Subsequently, it pulled back from highs during the midday session, dropping to a low of $2,806.5/mt near the close. It eventually closed at $2,808/mt, down $26/mt or 0.92%. Trading volume increased to 8,514 lots, while open interest decreased by 977 lots to 193,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,495 yuan/mt. In the early session, SHFE zinc dropped to a low of 22,450 yuan/mt, then slowly fluctuated upward, reaching a high of 22,555 yuan/mt. Near the close, it dropped back slightly to around the daily average line, eventually closing at 22,505 yuan/mt, down 85 yuan/mt or 0.38%. Trading volume decreased to 35,657 lots, while open interest decreased by 4,003 lots to 89,383 lots.

Macro: Trump: Gold will not be subject to tariff hikes; Trump's team includes Bowman, Jefferson, and Logan among the candidates for Fed Chairman; Trump: Meeting with Putin was exploratory; German government says European leaders and Ukrainian President Zelenskyy will speak with Trump on Wednesday; Trump declares public safety emergency in Washington, D.C.; Iraq and Iran sign a security memorandum of understanding on border coordination; WTO confirms Brazil has filed a lawsuit against US tariff measures; Ministry of Finance and State Taxation Administration solicit public comments on the "Implementation Regulations of the Value-Added Tax Law of the People's Republic of China (Draft for Comment)"; Central Clearing Corporation: Simplifies account opening materials for overseas central bank-type institutions, no longer requiring them to provide a commitment letter for agreement signing from today onwards.

Spot Market:

Shanghai: Yesterday morning, the futures market rose slightly, with downstream buyers continuing to wait and see, resulting in low purchase willingness. Overall spot transactions were sluggish, and traders continued to lower their spot quotes. Factory delivery quotes also fell. Enterprises made just-in-time procurement, and the overall trading atmosphere was relatively sluggish.

Guangdong: There was a spot discount of 20 yuan/mt against Shanghai spot. Yesterday, delivery brand quotes remained relatively high, but some enterprises also engaged in just-in-time procurement. However, as the futures market gradually rose, transactions in the second session became sluggish. The overall spot trading situation in the market remained relatively sluggish.

Tianjin: There was a spot discount of 10 yuan/mt against Shanghai spot. The futures market mainly fluctuated at highs, with downstream buyers still adopting a wait-and-see attitude and showing low purchase enthusiasm. Tianjin zinc ingot inventory continued to build up, and traders continued to lower premiums and discounts to facilitate sales. Trading among traders dominated, with overall transactions being sluggish.

Ningbo: There was a spot premium of 10 yuan/mt against Shanghai spot. Long-term contracts arrived in the Ningbo market one after another. Yesterday, the futures market remained under pressure at highs, and traders' spot quotes continued to expand their discounts. However, downstream demand was weak, and purchase willingness was generally low. Purchases were still made on a just-in-time basis with subsequent pricing, and some traders reported a deterioration in transactions.

Social inventory: On August 11, LME zinc inventory fell by 1,075 mt to 80,425 mt, a decrease of 1.32%. According to communication with SMM, as of August 11, the total zinc ingot inventory across seven locations tracked by SMM was 119,200 mt, an increase of 11,900 mt from August 4 and 6,000 mt from August 7, indicating a rise in domestic inventory.

Zinc price outlook: Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average providing support below. The market continues to await the US inflation report to gauge the prospects of an interest rate cut. The US dollar index has risen from a low level, putting some pressure on zinc prices. However, the strong support from low LME inventory has kept LME zinc prices fluctuating at highs. Overnight, SHFE zinc recorded a bullish candlestick, with the middle Bollinger Band forming resistance. On Monday, SMM zinc inventory continued to accumulate to around 120,000 mt. The domestic zinc market remains in a situation of strong supply and weak demand, with the center of SHFE zinc's night session prices slightly declining. Attention should be paid to subsequent macroeconomic guidance.

Data source disclaimer: 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, and are for reference only, not constituting decision-making advice.