US Dollar Index Rises, LME Zinc Continues to Decline [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes for September 22

Futures: On Friday, LME zinc opened at $2,917/mt, fluctuating at highs during the morning session and touching a high of $2,926/mt. It then declined throughout the afternoon session, hitting a low of $2,878/mt during the night session. LME zinc edged up slightly by the close, ending down 0.5% at $2,898.5/mt, a decrease of $14.5/mt. Trading volume fell to 9,867 lots, while open interest increased by 3,687 lots to 217,000. On the same day, the most-traded SHFE zinc 2511 contract opened at 21,960 yuan/mt, reaching an early high of 22,015 yuan/mt. As bears increased their positions, SHFE zinc gradually trended lower and maintained a fluctuating trend at lows, touching a low of 21,890 yuan/mt. It finally closed down 0.61% at 21,905 yuan/mt, a decrease of 135 yuan/mt. Trading volume rose to 63,497 lots, and open interest increased by 12,667 lots to 136,000.

Macro: The Republican funding bill failed to pass in the Senate; Minneapolis Fed President Kashkari stated that two more interest rate cuts this year would be appropriate; the European Commission adopted the 19th package of sanctions against Russia, lowering the crude oil price cap to $47.6 per barrel; US media reported that Trump will meet with Arab leaders on Tuesday to discuss a Gaza ceasefire; Trump and Musk were reported to have had a brief exchange and handshake at an event; according to CNBC, Berkshire Hathaway has completed an inventory clearance of BYD shares; President Xi Jinping held a phone conversation with US President Trump; Premier Li Qiang met with a US Congressional delegation; the State Council executive meeting discussed the revised draft of the Banking Supervision and Administration Law of the People's Republic of China; Shanghai officially released the ITU embodied AI robot standardization outlook and humanoid robot dataset standards.

Spot Market:

Shanghai: On Friday, the refined zinc procurement sentiment in Shanghai was 2.4, and the sales sentiment was 2.87. Futures maintained a fluctuating trend, with many traders selling in the market. Downstream players continued to adopt a wait-and-see approach, making just-in-time procurement for spot cargo. Overall market trading noticeably slowed, and spot premiums struggled to rise.

Guangdong: On Friday, the refined zinc procurement sentiment in Guangdong was 2.19, and the sales sentiment was 2.45. Affected by some end-user enterprises having halted production for holidays, the number of traders selling in the market decreased. Zinc prices fluctuated, with some downstream enterprises having made fixed-price procurement last Thursday and mostly adopting a wait-and-see stance on Friday. The price spread between futures contracts narrowed slightly, and spot premiums and discounts edged up.

Tianjin: On Friday, the refined zinc procurement sentiment in Tianjin was 2.21, and the sales sentiment was 2.67. Zinc prices continued in the doldrums on Friday. Most downstream players made fixed-price purchases on Thursday and picked up goods on Friday. Coupled with maintenance at some smelters, arrivals in Tianjin were limited, reducing market availability. Traders sold at slightly higher premiums, and overall market transactions were moderate.

Ningbo: The Ningbo market had ample supply, with spot cargo quotes holding steady at lows last Friday. Futures fluctuated at lows, downstream point pricing decreased, and with sufficient raw material inventory, purchase willingness was low last Friday, resulting in average spot transaction performance.

Social Inventory: On September 19, LME zinc inventory decreased by 1,000 mt to 47,825 mt, a decline of 1.31%. According to SMM communication and understanding, as of September 18, the total zinc ingot inventory in seven regions tracked by SMM was 158,500 mt, an increase of 4,300 mt compared to September 11, but a decrease of 2,100 mt compared to September 15, indicating a reduction in domestic inventory.

Zinc Price Forecast: Last Friday, LME zinc recorded three consecutive bearish candlesticks, with the 10-day moving average forming resistance overhead. The US Fed cut interest rates as expected, and macro tailwinds were fully priced in. The US dollar index rose sharply, putting pressure on zinc prices. However, the destocking trend in LME zinc inventory has not stopped, and with support from low inventory, it is expected that the decline in LME zinc may be limited. Last Friday, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance overhead. The peak consumption season in September underperformed, and the surplus logic in the domestic zinc market remains unchanged. Fundamentals continue to pressure zinc price trends, with bears significantly increasing positions. It is expected that SHFE zinc will remain in the doldrums.

Data Source Statement: Except for public information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.