New Tariff Updates Emerge! LME Zinc Records a Bearish Candlestick [SMM Morning Meeting Minutes]

Futures:

On Friday, LME zinc opened at $3,022.00/mt, with its price center rising rapidly in early trading to hit a high of $3,060.00/mt. Entering the night session, bulls reduced their positions, pushing the zinc price down to a low of $2,970.00/mt. Although it attempted to recover some losses by the session's end, the upward momentum was limited, and it finally closed down at $2,984.50/mt, down $29.5/mt, a decrease of 0.98%. Trading volume decreased to 117,000 lots, and open interest fell by 54 lots to 220,000 lots. On Friday, the most-traded SHFE zinc 2511 contract opened at 22,450 yuan/mt, immediately reaching a high of 22,450 yuan/mt in early trading, then fluctuated downward throughout the session, touching a low of 22,100 yuan/mt by the end, and finally closed down at 22,110 yuan/mt, down 160 yuan/mt, a decrease of 0.72%. Trading volume decreased to 105,000 lots, and open interest fell by 477 lots to 106,000 lots.

Macro:

Court documents show the US government plans to lay off over 4,000 people; the list of candidates for Fed Chairman has reportedly been narrowed to five; Hamas: will fully retaliate if Israel resumes military operations; Pakistan and Afghanistan exchange fire in border areas, Trump: will try to resolve; Ministry of Commerce responds to US threat of 100% tariffs on Chinese goods; Wahaha personnel changes: Xu Simin takes over as general manager, chairman position vacant; Wingtech responds to subsidiary Nexperia's assets being frozen by Dutch government; number of new A-share accounts on Shanghai Stock Exchange in September up 60.73% YoY; Ministry of Commerce responds to special port fees for US ships: "justified defense".

Spot:

Shanghai: The purchasing sentiment for refined zinc in Shanghai was 2.10, and the willingness to sell was 2.43. Affected by transportation issues, Qin zinc arrivals were limited, and some suppliers plan to export, resulting in low willingness to offer. On Friday, zinc ingot supply in the market was tight, pushing spot offers higher. However, downstream enterprises held certain inventories, and futures maintained a fluctuating trend, with downstream purchases remaining need-based. Overall market trading was mainly among traders.

Guangdong: The purchasing sentiment for refined zinc in Guangdong was 2.01, and the sales sentiment was 2.32. On Friday, the zinc price center rose again, with downstream enterprises showing strong fear of high prices and low purchasing enthusiasm. Meanwhile, spot zinc volume in Guangdong reached a three-year high, with ample supply, but traders had low willingness to sell at low prices. Coupled with an expanding price spread between futures contracts, spot premiums/discounts remained flat compared to the previous day.

Tianjin: The purchasing sentiment for refined zinc in Tianjin was 1.91, and the willingness to sell was 2.20. On Friday, Tianjin quoted for contract rollover, and zinc prices continued to rise. Downstream enterprises were cautious due to high prices and high zinc ingot inventories, leading to low purchasing sentiment. Traders slightly lowered offers to facilitate sales, resulting in poor overall market transactions.

Ningbo: Zinc ingots arrived in Ningbo successively, and market supply increased. Last Friday, spot zinc quotations in Ningbo held steady, while futures maintained a fluctuating trend. Some downstream users made purchases for restocking, and spot transactions performed moderately.

Inventory:

On October 10, LME zinc inventory decreased by 300 mt to 37,950 mt, down 0.78%. According to SMM communication, as of October 9, the total zinc ingot inventory across seven regions tracked by SMM 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: Last Friday, LME zinc recorded a bearish candlestick, with support from the 20-day and 60-day daily average moving averages. Former U.S. President Trump stated on social media that he would impose 100% tariffs on China, deepening market concerns over future trade. Amid uncertainty, many bulls exited positions, leading to a decline in LME zinc. Overnight, SHFE zinc recorded a bearish candlestick with no upper shadow, pressured by the upper Bollinger Band and supported by the 5-day daily average moving average. Affected by tariff news, future trade uncertainty remains high. From a fundamental perspective, domestic supply remains strong while demand is weak. Today’s inventory data should be monitored. Given that zinc ingots have not been exported in large quantities, SHFE zinc is expected to fluctuate in the short term.

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 as decision-making advice.