LME Zinc Hits Near 10-Month High, Focus on Domestic Export Situation [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for October 10

Futures: Overnight, LME zinc opened at $2,991/mt. Initially, it consolidated around the daily average before moving up to trade near $3,025/mt. Approaching the night session, bulls increased positions, pushing LME zinc up rapidly to touch a high of $3,080/mt. Subsequently, bulls took profits and exited, causing LME zinc to record a "V"-shaped reversal. By the end of the session, it pulled back to $3,015/mt, finally settling at $3,014/mt, up $19/mt, a gain of 0.63%. Trading volume increased to 22,259 lots, while open interest decreased by 4,049 lots to 220,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened higher with a gap at 22,465 yuan/mt. Initially, it consolidated around the daily average, touching a high of 22,515 yuan/mt during the session, before slightly retreating to trade near 22,400 yuan/mt. It finally settled at the day's low of 22,335 yuan/mt, up 135 yuan/mt, a gain of 0.61%. Trading volume decreased to 9,753 lots, while open interest decreased by 4,768 lots to 108,000 lots.

Macro: US Fed "third-in-command" supports further interest rate cuts; US September CPI report is expected to be released during the government shutdown; Phase one Gaza ceasefire officially takes effect; DRC central bank to start building gold reserves as gold prices surge; Takachiho Naomi: No intention to cause excessive yen depreciation; Ministry of Commerce announces decision to implement export controls on rare earth-related technologies.

Spot Market:

Shanghai: The purchase willingness for refined zinc in Shanghai was 2.04, while the selling willingness was 2.4. On the first trading day after the holiday, some traders were still on break, and market supply was limited. Although some suppliers offered at higher prices, the significant rise in futures during the morning session, coupled with incomplete digestion of zinc ingot inventories by some downstream enterprises, led to low purchase willingness among downstream enterprises. Overall trading was mainly driven by traders.

Guangdong: The purchase willingness for refined zinc in Guangdong was 2.04, while the selling willingness was 2.21. Due to higher zinc prices, overall market trading was relatively light. However, after returning from the National Day holiday, some downstream enterprises conducted necessary restocking, and with a slight contraction in the price spread between futures contracts, spot premiums/discounts edged up.

Tianjin: The purchase willingness for refined zinc in Tianjin was 1.93, while the selling willingness was 2.17. Yesterday, zinc prices saw a post-holiday catch-up rise, but many downstream enterprises were still on holiday during the National Day period, resulting in few inquiries. Most traders adopted a wait-and-see attitude, and market offers were chaotic. The export window is expected to open, drawing market attention to export conditions. Overall market transactions were poor.

Ningbo: On the first trading day after the National Day holiday, market supply was limited, with few traders offering spot cargo. Although futures rose significantly, some small and medium-sized downstream enterprises inquired and restocked after the holiday, while other factories still held certain raw material inventories. Spot premiums struggled to rise.

Social Inventory: On October 9, LME zinc inventory remained flat at 38,250 mt, down 2.38%. According to SMM communication, as of October 9, the total zinc ingot inventory in seven SMM regions was 150,200 mt, down 200 mt from September 25, but up 8,800 mt from September 29, indicating an increase in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc recorded a bullish candlestick with a long upper shadow, supported below by the 10-day daily average. Global economic recovery, supply disruptions in other metals, and a boost from rising gold prices have strengthened the overall non-ferrous metals trend. With zinc inventories at low levels, the backwardation structure widened to over 60, and funds drove prices up, with zinc hitting a nearly 10-month high during the session. The domestic export window is nearing opening; monitor the subsequent domestic export window, as significant exports could lead to a pullback in zinc prices. Overnight, SHFE zinc recorded a bearish candlestick with no lower shadow, supported below by various daily averages. Overnight, SHFE zinc's center shifted upward, driven by LME zinc, but on the fundamentals side, October production rose to over 620,000 mt, and both social inventory and smelter inventory saw buildup after the holiday. If substantial domestic exports occur, SHFE zinc may maintain high levels; otherwise, there remains a risk of a pullback.

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.