LME Continues Destocking, LME Zinc Center Shifts Upward [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes, September 25

Futures: Overnight, LME zinc opened at $2,893/mt, fluctuated rangebound around the daily average after opening, then rose rapidly upon entering the night session. Approaching the close, LME zinc touched a high of $2,945/mt before pulling back slightly, finally settling at $2,922.5/mt, up $22/mt or 1.14%. Trading volume increased to 10,392 lots, while open interest decreased by 794 lots to 215,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 21,935 yuan/mt. Initially, it fluctuated rangebound and tested a low of 21,895 yuan/mt, then gradually fluctuated upward, touching a high of 22,000 yuan/mt during the session. Nearing the end, it shifted back to a fluctuating trend, finally settling at 21,995 yuan/mt, up 135 yuan/mt or 0.62%. Trading volume increased to 72,756 lots, while open interest decreased by 770 lots to 141,000 lots.

Macro: US Treasury Secretary Besant: Powell should have signaled 100 to 150 basis points of interest rate cuts; FOMC voting member this year Goolsbee: Unwilling to support an interest rate cut at the next meeting; US formally lowers tariffs on EU automobiles to 15%; US launches Section 232 investigations on imported medical devices, industrial machinery, etc.; Kremlin: Trump is trying to force the world to buy US oil and natural gas at higher prices; Oil exports via the Iraq-Turkey pipeline are expected to resume; Chinese President Xi Jinping: By 2035, China's economy-wide net greenhouse gas emissions will drop by 7% to 10% from the peak; The Ministry of Commerce, together with the Cyberspace Administration of China, the Ministry of Finance, and 5 other departments, issued the "Several Policy Measures on Promoting Service Exports"; The Ministry of Commerce and 7 other departments jointly issued the "Guiding Opinions on Vigorously Developing Digital Consumption and Jointly Creating a Better Life in the Digital Age"; The nuclear fusion "national team" will build a new high-temperature superconducting fusion device in Shanghai, named "HL-4".

Spot Market:

Shanghai: Yesterday, the refined zinc purchase sentiment in Shanghai was 2.45, while the sales sentiment was 2.85. Traders in the market mainly focused on selling. Although futures continued to fall, some downstream users had previously purchased at low points through fixed pricing, and stockpiling was basically completed. Market inquiries and purchases decreased MoM, spot transactions maintained rigid demand, and spot premiums struggled to rise.

Guangdong: Yesterday, the refined zinc purchase sentiment in Guangdong was 2.21, while the sales sentiment was 2.41. Overall, affected by typhoon weather, production halts and work stoppages began within Guangdong Province, and transportation was also hindered. Yesterday, the number of selling traders in the Guangdong market decreased, some spot offers were high making sales difficult, downstream purchase enthusiasm was low, market transactions were sluggish, and spot premiums/discounts were flat compared to the previous day.

Tianjin: Yesterday, the refined zinc purchase sentiment in Tianjin was 2.41, while the sales sentiment was 2.48. Zinc prices continued to trade at low levels yesterday. However, as downstream buyers had mostly completed their restocking through point pricing during the previous price decline, purchasing enthusiasm was relatively low. Additionally, with futures prices being too low, smelters and traders showed reluctance to sell. Traders maintained steady premiums for shipments, and overall market turnover weakened compared to the previous day.

Ningbo: Zinc futures prices continued to decline. Almost no traders in the Ningbo market made shipments yesterday. Downstream producers had previously purchased through point pricing and currently hold a certain amount of raw material inventory. Due to limited availability of spot cargo, spot trades remained sluggish yesterday. Qilin zinc ingots are expected to arrive by the end of the week, which may provide some replenishment to market supply.

Social Inventory: On September 24, LME zinc inventory decreased by 1,375 mt to 44,400 mt, a drop of 3%. According to SMM communications, as of September 22, the total zinc ingot inventory across seven regions tracked by SMM 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 Outlook: Overnight, LME zinc formed a bullish candlestick, supported by the middle Bollinger Band. LME zinc ingot inventory continued its destocking trend, falling to 44,000 mt. The LME cash-3M spread remained at high levels, and fund concentration stayed elevated. LME zinc was boosted, with its price center rebounding. Subsequent macro guidance will be closely watched. Overnight, SHFE zinc also formed a bullish candlestick, supported by the 5-day moving average. Pulled by LME zinc, SHFE zinc rebounded from low levels during the night session. However, smelters maintained strong production enthusiasm, and the domestic zinc surplus logic persists. With continued fundamental pressure, SHFE zinc’s rebound is expected to be limited.

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