Powell's Attitude "Turns Dovish", LME Zinc Center Rises [SMM Morning Meeting Summary]

Futures:

Last Friday, LME zinc opened at $2,774.5/mt. At the beginning of the session, LME zinc fluctuated rangebound along the daily average, hitting a low of $2,763.5/mt. During the European trading hours, bulls increased their positions, causing LME zinc to briefly rise. Subsequently, LME zinc pulled back below the daily average. However, during the night session, LME zinc rose to a high of $2,821.5/mt, and then slightly declined towards the end, closing at $2,805.5/mt, up by $38.5/mt, or 1.39%. Trading volume decreased to 62,909 lots, while open interest increased by 1,465 lots to 193,000 lots. Last Friday, the most-traded SHFE zinc 2510 contract opened at 22,220 yuan/mt. At the start of the session, SHFE zinc hit a low of 22,200 yuan/mt. It then attempted to rise, but bears increased their positions, causing SHFE zinc to drop back slightly. Afterward, as bears reduced their positions, SHFE zinc quickly rose to a high of 22,465 yuan/mt. Towards the end of the session, bulls reduced their positions, leading to a slight pullback in SHFE zinc, which closed at 22,400 yuan/mt, up by 125 yuan/mt, or 0.56%. Trading volume decreased to 75,325 lots, while open interest fell by 2,847 lots to 105,000 lots.

Macro: Powell finally "loosened his stance"? Some US Fed officials came out to pour cold water on it; Trump once again threatened to fire Fed Governor Cook; Trump announced plans to impose additional tariffs on all imported furniture; Canada announced the cancellation of some retaliatory tariffs on the US; Trump set another "two-week" timeline for Russia; The central bank will conduct a 600 billion yuan MLF operation today; Hang Seng Index Company released its quarterly review results; China Photovoltaic Industry Association (CPIA) issued an "anti-rat race" initiative; MIIT and two other departments issued a document clarifying the total control and management of rare earths.

Spot:

Shanghai: The futures market continued to fluctuate. Traders' spot quotations remained stable, and market transactions operated smoothly. Downstream enterprises purchased based on rigid demand, with overall transactions being moderate. With no improvement in consumption, it is expected that premiums will remain weak this week.

Guangdong: Zinc prices maintained a fluctuating trend, and there was a large amount of circulating spot in the Guangdong market. Downstream buyers were keen on driving down purchasing prices, and some end-users had already restocked mid-week. Transactions last Friday were moderate, and spot premiums and discounts remained unchanged.

Tianjin: The futures market continued to be in the doldrums last Friday. Downstream enterprises showed little interest in restocking and mainly adopted a wait-and-see attitude. Some large factories balanced their average purchase prices through restocking. Traders' selling premiums remained stable, and overall market transactions were moderate.

Ningbo: Last Friday, traders in the Ningbo market focused on selling, with spot quotations remaining low. However, orders from downstream alloy plants remained weak. The futures market also stopped declining and maintained a fluctuating trend. Spot zinc ingot transactions last Friday were still based on rigid demand. Over the weekend, more zinc ingots arrived in the Ningbo market, and with ample supply, spot premiums are unlikely to improve.

Social inventory: On August 24, LME zinc inventory decreased by 1,300 mt to 68,075 mt, a decline of 1.87%; according to SMM communication and understanding, as of this Thursday (August 21), the total zinc ingot inventory in seven locations was 132,900 mt, an increase of 3,700 mt from August 14, and a decrease of 2,600 mt from August 18, with domestic inventory decreasing.

Zinc price forecast: Last Friday, LME zinc recorded a large bullish candlestick, with the upper Bollinger Band providing resistance and the 60-day moving average offering support below. The US dollar index plummeted due to Powell's speech at the Jackson Hole conference, which boosted market expectations for an interest rate cut in September, while overseas inventories continued to decrease, supporting LME zinc's upward trend. Last Friday, SHFE zinc also recorded a large bullish candlestick, with the middle Bollinger Band providing resistance above and the 60-day moving average offering support below. Currently, the spot zinc supply in various domestic markets is relatively abundant, but overall end-use consumption remains weak, exerting some pressure on zinc prices. However, the reduction of overseas inventory to below 70,000 mt provides some support to SHFE zinc, and it is expected that zinc prices will mainly fluctuate in the short term.