Macro sentiment gradually dissipated, and LME zinc began to decline [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Notes on August 14

Futures: Overnight, LME zinc opened at $2,845/mt. Early in the session, LME zinc reached a high of $2,851/mt, then fluctuated downward throughout the session, hitting a low of $2,810/mt near the close. It eventually closed at $2,811.5/mt, down $36.5/mt or 1.28%. Trading volume decreased to 6,970 lots, while open interest increased by 1,359 lots to 194,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,600 yuan/mt. Early in the session, SHFE zinc reached a high of 22,640 yuan/mt, then fluctuated downward after the opening, hitting a low of 22,540 yuan/mt near the close. It eventually closed at 22,540 yuan/mt, down 60 yuan/mt or 0.27%. Trading volume decreased to 26,590 lots, while open interest decreased by 88 lots to 85,898 lots.

Macro: It is reported that the Trump administration is considering 11 candidates for Fed Chairman. Trump: If Russia does not stop the conflict, it will face consequences. If the meeting goes smoothly, a trilateral meeting between the US, Russia, and Ukraine will be held. Bessent: There is a possibility for the Fed to cut interest rates by 50 basis points, and interest rates should be lowered by 150-175 basis points. Russia will extend oil production cuts for the remainder of 2025. The IEA expects a record surplus in global oil supply next year. China's M2 grew by 8.8% YoY at the end of July. Social financing increased by 23.99 trillion yuan in the first seven months. The National Financial Regulatory Administration: Will dynamically track the flow of discounted loans to prevent the risk of misappropriation of discounted funds. Liao Min from the Ministry of Finance: After the expiration of the one-year "double discount" policy, whether to extend it will be studied based on the situation.

Spot Market:

Shanghai: Yesterday morning, the futures continued to rise slightly. Domestic spot premiums against the average price fell slightly MoM. The overall market selling was sluggish, and spot premiums remained weak. Downstream buyers were cautious about purchasing at high prices, with fewer inquiries, and market transactions were mainly between traders.

Guangdong: Spot discounts against Shanghai were 20 yuan/mt. Overall, the futures center rose slightly MoM yesterday. Downstream buyers had strong fear of high prices, and market transactions deteriorated. Traders slightly lowered premiums and discounts for selling, and spot premiums and discounts fell slightly.

Tianjin: Tianjin reported discounts of 10 yuan/mt against Shanghai. The futures continued to rise, and downstream buyers were cautious about purchasing at high prices, mostly adopting a wait-and-see attitude. Some traders were concerned about production restrictions during the military parade and were bearish on premiums, lowering premiums for selling. However, some traders had delivery intentions and were not eager to sell, with transactions mainly between traders. Overall, transactions were sluggish.

Ningbo: Spot premiums against Shanghai were 10 yuan/mt. Qilin zinc ingots are expected to arrive in the Ningbo market soon, and the market supply of zinc ingots remains abundant. The futures maintained highs, and some traders continued to lower premium quotes for selling. However, downstream buyers still purchased based on rigid demand, and the trading atmosphere was sluggish.

Social inventory: On August 13, LME zinc inventory decreased by 1,075 mt to 78,475 mt, a decline of 1.35%. 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 an increase of 6,000 mt from August 7, indicating a rise in domestic inventory.

Zinc price forecast: Overnight, LME zinc recorded a bearish candlestick, with the 20-day moving average providing support below. The macro sentiment brought about by factors such as tariff extensions has gradually been digested, and LME zinc has shifted to a downward trend, but the low LME inventory still provides support for zinc prices, limiting the extent of LME zinc's decline. Overnight, SHFE zinc recorded a bearish candlestick, with the middle Bollinger Band providing support. The domestic zinc ingot inventory buildup trend continues, and with insufficient support for zinc prices amid off-season consumption, coupled with the drag from the decline in LME, SHFE zinc pulled back slightly during the night session.

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.