LME funds are highly concentrated, and the decline in LME zinc has temporarily halted [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes for September 23

Futures: Overnight, LME zinc opened at $2,895.5/mt, fluctuated upward after opening, and touched a high of $2,934/mt during the night session. It then pulled back sharply from the high, touched a low of $2,888.5/mt near the end of the session, and rose slightly before finally closing up at $2,900/mt, up $1.5/mt, or 0.05%. Trading volume increased by 938 lots to 10,805 lots, and open interest decreased by 1,477 lots to 216,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 22,080 yuan/mt, touched a high of 22,095 yuan/mt at the beginning of the session, then fluctuated downward below the daily average line, touched a low of 21,985 yuan/mt during the session, and rose slightly before finally closing down at 22,035 yuan/mt, down 55 yuan/mt, or 0.25%. Trading volume decreased to 42,394 lots, and open interest increased by 320 lots to 131,000 lots.

Macro: Numerous US Fed officials released hawkish signals; US Treasury Secretary Besant hinted at possible financial assistance to Argentina; France and several other countries announced official recognition of the State of Palestine; NVIDIA plans to invest 100 billion dollars in OpenAI to jointly build an AI data center; Chinese Vice Premier He Lifeng: China and the US should follow the important consensus reached by the heads of state in their phone call and promote stable, healthy, and sustainable development of bilateral economic and trade relations; Will Chinese and US leaders meet at APEC? Ministry of Foreign Affairs: China and the US are in communication; PBOC Governor Pan Gongsheng: Regarding the US Fed's interest rate cut, China's monetary policy adheres to prioritizing domestic conditions while considering internal and external balance; SSE Party Committee: Greater efforts to promote medium and long-term capital entry into the market, continuously stabilize and activate the capital market

Spot Market:

Shanghai: Yesterday, the refined zinc buying sentiment in Shanghai was 2.52, and the selling sentiment was 2.93. In the early session, zinc prices traded below 22,000 yuan/mt, downstream enterprises actively placed limit orders to buy the dip, purchasing sentiment was strong, traders also actively offered and sold, and spot premiums in the market rose slightly.

Guangdong: Yesterday, the refined zinc buying sentiment in Guangdong was 2.29, and the selling sentiment was 2.54. In the early session, zinc prices were low, downstream buyers bought the dip, and market trading improved. However, as zinc prices continued to rise, spot transactions weakened.

Tianjin: Yesterday, the refined zinc buying sentiment in Tianjin was 2.37, and the selling sentiment was 2.61. At the opening, zinc prices fell sharply. In the early session, downstream buyers actively placed limit orders to purchase. Later, when futures rebounded above 22,000 yuan/mt, market transactions clearly weakened. When futures were too low, smelters were reluctant to sell, traders' selling premiums rose slightly, and overall market transactions improved WoW.

Ningbo: Yesterday, the supply in the Ningbo market was limited. In the early session, zinc prices fell significantly. Downstream enterprises placed many limit orders, and with increased stockpiling orders, some alloy plants actively purchased zinc ingots. Spot transactions in the Ningbo market performed moderately yesterday.

Social Inventory: On September 22, LME zinc inventory decreased by 1,000 mt to 46,825 mt, a decline of 2.09%. According to SMM communication, as of September 22, the total SMM zinc ingot inventory across seven regions was 157,000 mt, down 3,600 mt from September 15 and 1,500 mt from September 18, indicating a reduction in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bullish candlestick, with support from the 20-day moving average. The market continued to digest speeches from US Fed officials, and the US dollar index weakened slightly. Coupled with the ongoing destocking trend in LME zinc inventory, the 0-3 backwardation structure expanded to $50.91/mt. With high capital concentration, the decline in LME zinc temporarily halted. Overnight, SHFE zinc recorded a bearish candlestick, with resistance from the 10-day moving average. Although domestic zinc ingot inventory decreased before the National Day holiday, smelters remained active in production driven by profits. Despite some stocking demand, overall orders remained underperforming for the peak season, keeping zinc prices under pressure. It is expected to maintain a fluctuating trend.

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 as a decision-making recommendation.