Zinc Prices Fell Back From Highs, Focus on Non-Farm Payrolls Data Performance [SMM Morning Meeting Summary]

Zinc Morning Meeting Minutes on September 5

Futures: Overnight, LME zinc opened at $2,868.5/mt. Initially, it followed the daily moving average downward, probing a low of $2,828.5/mt near the night session before a slight upward correction at the close. It finally settled at $2,838/mt, down $31.5/mt or 1.1%, with trading volume decreasing to 12,511 lots and open interest increasing by 1,955 lots to 198,000 lots. Overnight, the most-traded SHFE zinc 2510 contract opened at 22,035 yuan/mt. Initially, it followed the daily moving average upward to a high of 22,135 yuan/mt before bulls took profits and exited, pushing prices back above the daily moving average. It finally settled at 22,070 yuan/mt, down 65 yuan/mt or 0.29%, with trading volume decreasing to 10,465 lots and open interest decreasing by 1,412 lots to 117,000 lots.

Macro: US August ADP employment data fell short of expectations; the US Department of Justice launched a criminal investigation into Fed Governor Cook; Fed nominee Milan advised against presidential control of the Fed; the Fed's "third-in-command" stated that interest rate cuts over time are appropriate; Trump signed an executive order to formally implement the US-Japan trade agreement; gold ETFs attracted $5.5 billion in August; the State Council issued 20 measures to unleash sports consumption potential; the central bank conducted 1,000 billion yuan in outright reverse repo operations today.

Spot market:

Shanghai: Yesterday, the refined zinc purchase sentiment in Shanghai was 2.69, while the sales sentiment was 2.88. In the morning, futures prices fell sharply to around 22,000 yuan/mt, reaching the psychological price level of some downstream enterprises. Downstream enterprises showed strong pricing interest yesterday, but new purchases were limited. Traders also actively offloaded cargo, with spot premiums rising slightly. Overall, spot transactions improved MoM.

Guangdong: Yesterday, the refined zinc purchase sentiment in Guangdong was 2.28, while the sales sentiment was 2.75. Overall, futures prices trended downward, but with ample spot supply in the market, downstream enterprises showed strong price-driving sentiment. Spot transactions improved slightly, while the price spread between futures contracts narrowed and spot premiums/discounts rose.

Tianjin: Yesterday, the refined zinc purchase sentiment in Tianjin was 2.36, while the sales sentiment was 2.63. Zinc prices fell sharply yesterday, and downstream production and transportation restrictions were lifted. However, most enterprises still held zinc ingot inventories, with more pricing interest than actual purchases. Traders' spot premiums/discounts rose slightly, and overall market transactions improved compared to the previous day.

Ningbo: Few traders offloaded cargo in Ningbo yesterday, and with limited supply, some downstream enterprises actively inquired about prices. Coupled with the significant drop in morning futures prices, spot discounts continued to narrow. Downstream enterprises purchased at lower prices, and overall spot transactions performed well.

Social inventory: On September 4, LME zinc inventory decreased by 475 mt to 54,750 mt, down 0.86%. According to SMM communication, as of September 4, SMM's seven-region zinc ingot inventory totaled 148,900 mt, up 4,500 mt from August 28 and 2,600 mt from September 1, indicating an increase in domestic inventory.

Zinc Price Forecast: The LME zinc contract recorded a long-lower-shadow bearish candlestick overnight, with the upper Bollinger Band forming resistance. The strengthening US dollar overnight exerted pressure on nonferrous metals, while the US ADP employment data fell short of expectations and initial jobless claims exceeded forecasts. Today's focus is on the performance of non-farm payrolls data. The SHFE zinc contract recorded a small bullish candlestick overnight, with the lower Bollinger Band providing support. Profit-taking by bulls overnight led to a downward shift in the price center, but the persistent backwardation structure overseas partially limited the downside room.

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