US GDP Data Revised Upward, LME Zinc Hovers at Highs [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for September 26

Futures: Overnight, LME zinc opened at $2,927/mt. It fluctuated rangebound around the daily average initially, hitting a low of $2,913.5/mt, then rose continuously. Entering the night session, LME zinc touched a high of $2,960/mt before pulling back from the high level, finally closing flat at $2,922.5/mt. Trading volume increased to 11,625 lots, and open interest rose by 1,804 lots to 217,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 22,045 yuan/mt. After opening, it continued to fluctuate rangebound narrowly around the daily average, hitting a low of 21,995 yuan/mt early in the session and a high of 22,085 yuan/mt during the session, finally closing up at 22,050 yuan/mt, up 5 yuan/mt or 0.02%. Trading volume decreased to 62,614 lots, and open interest fell by 1,322 lots to 129,000 lots.

Macro: US Q2 GDP was revised significantly higher, hitting a two-year high; Dallas Fed President Logan called for reforming the interest rate benchmark; Fed Governor Cook warned the Supreme Court: market would fall into "chaos" if fired; US military fighter jets scrambled to intercept Russian aircraft near Alaska; US Secretary of Defense Hagesses assembled senior US military commanders globally for a meeting next week; Ukrainian President Zelensky: prepared to step down after the Russia-Ukraine conflict ends, elections will be held if ceasefire occurs; Vice Minister of Commerce Li Chenggang met with an international business delegation; National Financial Regulatory Administration held a seminar for financial regulators from ASEAN, Japan and South Korea; Ministry of Agriculture and Rural Affairs: strengthen comprehensive regulation of pig capacity, effectively ensure supply and stabilise prices; firmly oppose involution-style competition in the copper smelting industry, China Nonferrous Metals Industry Association held a meeting.

Spot Market:

Shanghai: Yesterday, the purchasing sentiment for refined zinc in Shanghai was 2.41, and the selling sentiment was 2.79. Zinc futures prices fluctuated rangebound, market traders mainly focused on selling, downstream enterprises made routine purchases, purchasing enthusiasm was not high, and spot market transactions performed averagely.

Guangdong: Yesterday, the purchasing sentiment for refined zinc in Guangdong was 2.29, and the selling sentiment was 2.48. The impact of typhoon weather in Guangdong has weakened, transportation is gradually recovering, market activity increased yesterday, but downstream sentiment to drive down prices remained strong, and spot premiums/discounts edged higher.

Tianjin: Yesterday, the purchasing sentiment for refined zinc in Tianjin was 2.36, and the selling sentiment was 2.41. Zinc prices mainly fluctuated rangebound yesterday, most downstream companies had completed priced stockpiling, coupled with a slight rebound in futures, priced inquiries were few. Yesterday was the last day for this month's long-term contracts, most traders were settling accounts, selling was limited, market prices held stable, and overall market transactions were average.

Ningbo: Qilin zinc ingots arrived in Ningbo, but some ingots were pre-sold. Spot availability in the market remained limited yesterday, traders quoted passively, spot premiums were basically stable, downstream enterprises inquired and purchased, and spot transactions were relatively quick.

Social Inventory: On September 25, LME zinc inventory decreased by 600 mt to 43,800 mt, a drop of 1.35%. According to SMM communication, as of September 25, the total zinc ingot inventory in seven SMM regions was 150,400 mt, down 8,000 mt from September 18 and 6,600 mt from September 22, indicating a decline in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc recorded a bearish candlestick, with support from the 5-day moving average. The US Q2 GDP data was significantly revised upward, and the US dollar index rose sharply, putting pressure on zinc prices. However, strong support from low LME inventory kept LME zinc hovering at highs. Overnight, SHFE zinc recorded a bullish candlestick, with resistance from the 20-day moving average. Influenced by pre-holiday downstream stocking demand, SMM zinc ingot inventory dropped to around 150,000 mt. Coupled with the boost from LME gains, the center of SHFE zinc continued to rise during the night session. Zinc prices are expected to maintain a fluctuating trend.

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, for reference only and not constituting decision-making advice.