The Concentration of Funds Increased, LME Zinc Recorded a Four-Day Winning Streak [SMM Morning Meeting Summary]

Zinc Morning Meeting Minutes on September 3

Futures: Overnight, LME zinc opened at $2,831/mt. Bulls increased positions at the start, driving LME zinc up along the daily moving average. During European trading hours, the price center shifted to around $2,860/mt before bears entered and bulls exited, testing lower levels. In the night session, the price center moved down to $2,840/mt but rebounded to consolidate near $2,860/mt by the close, settling at $2,865.5/mt, up $32.5/mt (1.15%). Trading volume rose to 13,277 lots, while open interest increased by 4,327 lots to 197,000. Overnight, the most-traded SHFE zinc 2510 contract opened at 22,250 yuan/mt. After briefly testing 22,230 yuan/mt at the start, it rose steadily on bull entry and bear exit, closing at the day’s high of 22,365 yuan/mt, up 100 yuan/mt (0.45%). Trading volume stood at 59,362 lots, while open interest fell by 956 lots to 107,000.

Macro: Trump: Will appeal to the Supreme Court on tariff ruling as early as Wednesday; UK stocks, bonds, and currency plummeted due to fiscal concerns; Senior LDP officials in Japan express resignation intentions; Russia and US plan new round of talks; Foreign Ministry: China to trial visa-free policy for ordinary Russian passport holders; August passenger NEV wholesale sales up 24% YoY.

Spot market:

Shanghai: Yesterday, Shanghai’s refined zinc purchase sentiment was 2.30, while sales sentiment was 2.75. Spot traders increased MoM, with quoted premiums against the average narrowing slightly. Futures edged higher, but downstream enterprises maintained a wait-and-see stance, purchasing only for rigid demand. Overall spot trades were moderate, with spot premiums/discounts holding steady.

Guangdong: Yesterday, Guangdong’s refined zinc purchase sentiment was 2.12, while sales sentiment was 2.88. Rising futures dampened downstream purchasing enthusiasm. Except for some second-tier delivered brands, premiums/discounts for other brands remained firm, leading to sluggish spot trades and slightly lower spot premiums/discounts.

Tianjin: Yesterday, Tianjin’s refined zinc purchase sentiment was 2.27, while sales sentiment was 2.61. Futures rebounded slightly, but downstream production halts left most firms with no procurement needs. Traders kept offers stable, with transactions mainly among traders. Overall market performance was weak.

Ningbo: Few spot traders in Ningbo adjusted offers, keeping them stable from the previous day. With futures rising in the morning, downstream orders showed no significant improvement, maintaining rigid demand purchases. Overall trading was stable.

Social inventory: On September 2, LME zinc inventory fell by 275 mt to 55,600 mt (down 0.49%). As of September 1, SMM’s seven-region zinc ingot inventory totaled 146,300 mt, up 7,800 mt from August 25 and 1,800 mt from August 28, indicating rising domestic stocks.

Zinc Price Forecast: LME zinc recorded a four-day winning streak overnight, with various moving averages providing support below and the KDJ gap expanding upward. Zinc prices fluctuated upward overnight, as LME inventory continued to decline while the LME 0-3 backwardation structure widened to $20.44/mt, with increased fund concentration. SHFE zinc formed a bullish candlestick with a bare head overnight, facing resistance from the 20/40 daily average moving averages above. Under the macro expectation of an interest rate cut, bearish funds mainly exited the market overnight, coupled with the upward movement of SHFE zinc driven by LME, but fundamental support remains insufficient. Monitor fund dynamics.

Data Source Statement: Except for publicly available information, other data are derived from public information, market exchanges, and SMM's internal database model, processed by SMM for reference only and do not constitute decision-making advice.