US dollar remains strong, LME zinc under pressure [SMM Zinc Morning Meeting Summary]

SMM August 20 Zinc Morning Meeting Summary
Futures: Overnight, LME zinc opened at $2,776.5/mt, mainly fluctuating around the daily moving average at the beginning of the session. During European trading hours, it rose to a high of $2,787/mt. Subsequently, with bulls reducing positions, LME zinc fluctuated downward, reaching a low of $2,761/mt during the night session, and finally closed down at $2,770/mt, a decrease of $14/mt or 0.5%. Trading volume dropped to 7,239 lots, and open interest decreased by 1,232 lots to 193,000 lots. The most-traded SHFE zinc 2510 contract opened at 22,215 yuan/mt, briefly rising to 22,275 yuan/mt at the start of the session. With bears increasing positions and insufficient upward momentum, the center pulled back to a low of 22,155 yuan/mt, and finally closed down at 22,180 yuan/mt, a decrease of 25 yuan/mt or 0.11%. Trading volume fell to 41,879 lots, and open interest increased by 2,745 lots to 10.8 lots.
Macro: US Treasury Secretary Besent: Will begin meeting with 11 Fed Chairman candidates around September 1; The Fed's vice chair for financial regulation suggested allowing Fed staff to hold small amounts of cryptocurrency; Sources: White House considering hosting a summit between Russian and Ukrainian leaders in Hungary; US Commerce Secretary Rutnik confirmed the government is seeking to acquire a 10% stake in Intel; Trump ruled out sending ground troops to Ukraine but said air support is an option; S&P affirmed the US "AA+/A-1+" sovereign rating, outlook remains stable; Special representatives from China and India reached a 10-point consensus on border issues; Three new scenarios added for personal pension withdrawals; MIIT and other departments jointly held a PV industry symposium, deploying further work to regulate competition in the PV industry.
Spot Market:
Shanghai: As futures zinc prices continued to fall, downstream enterprises increased their price fixing at lower points. Shanghai traders raised spot quotes, but factories continued to sell at low prices. Downstream enterprises still preferred to purchase low-priced delivered zinc ingots, showing low willingness to pick up zinc ingots from warehouses. Spot trades in the Shanghai market were mainly among traders.
Guangdong: Overall, although zinc prices have slightly declined recently, due to relatively weak demand across various terminal sectors in Guangdong, downstream purchasing enthusiasm remains low. Yesterday, there was a slight improvement in the sales of delivery brands, but overall market transactions did not show significant improvement, with only a slight rise in spot premiums and discounts.
Tianjin: The futures continued to decline yesterday. Starting from the 20th, Tianjin restricted entry of vehicles below National V standards into factories, significantly impacting smaller factories, which have gradually suspended operations. Larger factories increased restocking at lower prices yesterday, but overall transactions were moderate. Traders' selling premiums remained stable, and overall transactions improved slightly compared to the previous day.
Ningbo: There was still a large discrepancy in quotations in the Ningbo market yesterday. Traders actively sold, with overall spot premiums remaining low. Some downstream enterprises fixed prices and purchased goods yesterday, but with no improvement in downstream orders, today's spot transactions were generally moderate.
Social inventory: On August 19, LME zinc inventory fell by 3,650 mt to 72,200 mt, a decrease of 4.81%; according to SMM communication, as of Monday (August 18), the total zinc ingot inventory in seven locations was 135,400 mt, an increase of 16,300 mt from August 11 and an increase of 6,200 mt from August 14, with domestic inventory recording an increase.
Zinc price forecast: Overnight, LME zinc recorded a small bearish candlestick; for H1 2025, the production of major overseas zinc mines increased by over 12% YoY. The strengthening US dollar continued to put pressure on non-ferrous metals, and funds were cautious, leading to a slight decline in LME zinc, awaiting more macro guidance. Overnight, SHFE zinc also recorded a small bearish candlestick. Restrictions on vehicles below National V standards began in Tianjin, with small factories gradually halting operations. Consumption remained weak, and with fluctuating macro sentiment, the center of SHFE zinc moved downward. It is expected that SHFE zinc will mainly be in the doldrums today.
Data source statement: Apart from publicly available information, other data are based on public information, market exchanges, and SMM's internal database model, processed by SMM for reference only and do not constitute decision-making advice.