Market Awaits Powell's Speech, LME Zinc Center Moves Up [SMM Zinc Morning Meeting Summary]

SMM August 21 Zinc Morning Meeting Summary
Futures: Overnight, LME zinc opened at $2,770.5/mt. At the beginning of the session, LME zinc briefly dipped to $2,766/mt, then mainly fluctuated around the daily moving average. Subsequently, as shorts reduced their positions, LME zinc fluctuated upward, reaching a high of $2,791.5/mt during the night session, and finally closed up at $2,786/mt, an increase of $16/mt or 0.58%. Trading volume decreased to 5,765 lots, and open interest fell by 1,495 lots to 191,000 lots. The most-traded SHFE zinc 2510 contract opened at 22,300 yuan/mt. It briefly rose to 22,330 yuan/mt at the start of the session, but then lacked upward momentum, with the center pulling back to 22,245 yuan/mt. It finally closed up at 22,300 yuan/mt, an increase of 35 yuan/mt or 0.16%. Trading volume decreased to 38,864 lots, and open interest fell by 571 lots to 110,000 lots.
Macro: Minutes from the US Fed's July meeting: Most officials believed that maintaining the status quo was appropriate; Israel has decided not to respond temporarily to the ceasefire proposal agreed upon by Hamas; it is reported that the Israeli military's plan to attack Gaza City has been approved by the defense minister; Medvedev: Russia does not accept the deployment of NATO's so-called "peacekeeping forces" in Ukraine; OpenAI CFO: Will consider going public at some point in the future; President Xi Jinping: To advance major projects such as the Yaxia hydropower project and the Sichuan-Tibet railway in a powerful, orderly, and effective manner; Premier Li Qiang: Increase the supply of high-quality technology and policy support, focusing on upgrading the biopharmaceutical industry; State Council Information Office introduced the preparations for the parade: New generation of military equipment will be showcased; Hong Kong Exchanges and Clearing (HKEX) will study a 24-hour trading mechanism.
Spot Market:
Shanghai: Some downstream buyers took advantage of lower prices during the previous night session. Yesterday morning, the futures rebounded above 22,000 yuan/mt, leading to renewed wait-and-see sentiment among downstream players who made just-in-time procurement of low-priced zinc ingots. Overall, spot quotations were basically stable compared to the previous day, with the Shanghai market dominated by trade between traders.
Guangdong: Overall, the futures center continued to decline slightly yesterday, while the price spread between futures contracts widened, and the Shanghai-Guangdong price spread increased. Sales in the Guangdong market improved slightly. Although non-delivery brands still faced difficulties in selling, and there was still significant pressure to drive down prices, some traders reported a slight improvement in sales, and spot premiums and discounts increased.
Tianjin: The futures were in the doldrums yesterday. Some downstream buyers restocked at lower prices, balancing the average price. Traders had a tendency to refuse to budge on prices, with premiums rising slightly. Trading activity among traders was active, and overall market sentiment was moderate.
Ningbo: Some traders completed low-price sales the previous day, resulting in a decrease in sales yesterday. With the recent decline in futures, downstream buyers made just-in-time procurement at lower prices, leading to an increase in spot quotations. However, downstream players maintained a bearish outlook and only met essential needs, with no further improvement in spot transactions.
Social Inventory: On August 20, LME zinc inventory fell by 950 mt to 71,250 mt, a decrease of 1.32%; according to SMM communication, as of this 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 bullish candlestick, with the 5/10-day moving averages forming resistance above. Currently, more funds are waiting for Powell's speech on Friday to confirm the September interest rate cut, with the US dollar closing lower and non-ferrous metals slightly rebounding, leading to an upward shift in the center of LME zinc. Overnight, SHFE zinc recorded a doji, with domestic consumption still showing weakness, but continuous destocking overseas has raised market concerns, making funds cautious. The center of SHFE zinc moved up slightly, and it is expected that SHFE zinc will mainly consolidate today.

Data Source Statement: Apart from publicly available information, other data are processed by SMM based on public information, market exchanges, and SMM's internal database model, for reference only and not as a basis for decision-making.