Overseas inventories continued to decline, and LME zinc recorded a bullish candlestick [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,002.50/mt. At the beginning of the session, the price center rose, touching a high of $3,040.00/mt, then fluctuated downward to probe a low of $2,987.00/mt. Subsequently, it gradually recovered the losses and moved higher, but encountered resistance and pulled back toward the session's close, ultimately settling at $3,012.00/mt, up $27.5/mt, a gain of 0.92%. Trading volume increased to 141,000 lots, and open interest rose by 621 lots to 221,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 22,330 yuan/mt, reaching its high immediately after opening. It then declined rapidly as bulls reduced their positions, probing a low of 22,235 yuan/mt. Following this, SHFE zinc rose to recover the losses. Toward the session's close, a tug-of-war between longs and shorts led the price center to maintain a fluctuating trend around 22,290 yuan/mt, ultimately settling at 22,285 yuan/mt, up 30 yuan/mt, a gain of 0.13%. Trading volume decreased to 54,960 lots, and open interest fell by 2,031 lots to 99,668 lots.

Macro: US Fed's Paulson hinted at supporting two more interest rate cuts this year; Four countries signed the "Comprehensive Document on the Gaza Ceasefire Agreement"; OPEC maintained its global crude oil demand growth forecast; The central bank and the Monetary Authority of Macao signed a memorandum of understanding on cross-border payment connectivity.

Spot:

Shanghai: The procurement sentiment for refined zinc in the Shanghai region was 2.23, while the sales sentiment was 2.49. Yesterday, few traders were selling in the Shanghai market, with spot premium quotes remaining high. However, as futures fluctuated, downstream enterprises made just-in-time procurement purchases. Spot trades in the Shanghai market were primarily conducted among traders.

Guangdong: The procurement sentiment for refined zinc in the Guangdong region was 2.03, while the sales sentiment was 2.35. Currently, inventory in the Guangdong region continues to increase. Although downstream demand exists, it is mostly just-in-time procurement. High inventory has exerted some pressure on the upward movement of spot premiums and discounts. Additionally, the price spread between futures contracts widened yesterday, leading to a slight decrease in premiums and discounts.

Tianjin: The procurement sentiment for refined zinc in the Tianjin region was 2.14, while the sales sentiment was 2.34. Yesterday, zinc prices dropped back slightly, but downstream inventory remained high, resulting in generally moderate procurement sentiment. However, some enterprises made just-in-time procurement purchases. Traders' quotes held steady with minor adjustments, and overall market turnover was moderate.

Ningbo: As previously held zinc ingot inventories were gradually consumed, some downstream enterprises began purchasing to restock. Overall turnover performance was moderate, with traders showing some reluctance to budge on prices, leading to a slight increase in spot quotes.

Inventory: On October 10, LME zinc inventory decreased by 475 mt to 37,475 mt, a drop of 1.25%. According to SMM communication, as of this Monday (October 13), the total zinc ingot inventory across seven regions tracked by SMM was 163,100 mt, an increase of 21,700 mt compared to September 29, and an increase of 12,900 mt compared to October 9, indicating a rise in domestic inventory.

Zinc Price Forecast: LME zinc recorded a bullish candlestick overnight, with support from the 20-day and 60-day daily averages below. Current international trade conditions remain uncertain, and market sentiment retains some risk aversion. Expectations for US Fed interest rate cuts continue to intensify, coupled with ongoing declines in overseas zinc inventory, and the backwardation structure has widened to over 100, providing strong support for LME zinc. SHFE zinc recorded three consecutive bearish sessions overnight, supported by the 5-day and 40-day daily averages below. According to SMM statistics, as of yesterday, domestic social inventory has increased to over 160,000 mt, spot cargo performance in the market is loose, and inventory is gradually building up, exerting some pressure on zinc price rises. Monitor subsequent domestic market consumption and destocking performance.

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.