Growing overseas inventory and trade concerns weigh down LME zinc [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,023.00/mt. In early trading, it fluctuated rangebound around the daily average line. During the European session, bulls reduced their positions, causing LME zinc to decline rapidly, touching a low of $2,911.5/mt, before rebounding slightly. It finally closed down at $2,953.5/mt, falling $58.5/mt, a decrease of 1.94%. Trading volume increased to 224,000 lots, while open interest decreased by 1,344 lots to 220,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 22,020 yuan/mt. Early in the session, bulls reduced positions, pushing the contract down to 21,915 yuan/mt. Subsequently, bears reduced their positions, leading to a fluctuating rebound. It touched a high of 22,070 yuan/mt towards the end of the session, finally closing down at 22,055 yuan/mt, falling 165 yuan/mt, a decrease of 0.74%. Trading volume decreased to 66,972 lots, while open interest decreased by 4,168 lots to 91,026 lots.

Macro: Powell: Balance sheet reduction may be nearing its end, downside risks in the job market are rising; Trump to release a list of projects supported by Democrats for closure on Friday; IEA expects the oil market to face a record supply surplus next year; IMF raises global growth forecast for 2025; Bank of America survey: Long gold becomes the most crowded trade; The central bank will conduct 600 billion yuan in outright reverse repo operations on October 15.

Spot:

Shanghai: The refined zinc purchase sentiment in Shanghai was 2.2, while the selling sentiment was 2.47. Futures maintained a fluctuating trend, and the import loss for zinc ingots continued to widen. Some suppliers focused on exports, showing low willingness to sell in the domestic market. Spot offers remained high, but downstream purchase enthusiasm was weak. With purchasing as needed, transaction performance was average.

Guangdong: The refined zinc purchase sentiment in Guangdong was 2.01, while the selling sentiment was 2.37. Zinc futures prices maintained a fluctuating trend. Social inventory in Guangdong continued to increase. Downstream purchases were mostly just-in-time procurement, with a strong wait-and-see sentiment. Market trading atmosphere was light, and spot premiums/discounts continued to decline.

Tianjin: The refined zinc purchase sentiment in Tianjin was 2.11, while the selling sentiment was 2.31. Zinc prices mainly fluctuated yesterday. Downstream purchase sentiment was average, primarily focused on just-in-time restocking. The export window opened, drawing market attention to zinc ingot exports. Traders' offers held steady with minor changes. Overall market transactions were average.

Ningbo: Recently, some downstream users received previously locked-price zinc ingots. The availability of imported zinc ingots in the market was limited. Traders showed some reluctance to budge on prices. However, with futures fluctuating, downstream purchases remained as needed, with low purchase willingness. Yesterday, spot premiums held steady.

Inventory: On October 14, LME zinc inventory increased by 1,125 mt to 38,600 mt, an increase of 3.00%. According to SMM communication, as of this Monday (October 13), the total zinc ingot inventory in seven regions tracked by SMM was 163,100 mt, increasing by 21,700 mt compared to September 29, and increasing by 12,900 mt compared to October 9. Domestic inventory increased.

Zinc Price Forecast: LME zinc recorded a large bearish candlestick overnight, with the lower Bollinger Band providing some support. Yesterday, LME zinc inventory increased to 38,600 mt, and although it remains at a relatively low level, the center of LME zinc shifted downward due to trade concerns. Powell's neutral-to-dovish remarks provided some room for decline, with subsequent focus on US macro data performance. SHFE zinc recorded a bullish candlestick overnight, supported by the lower Bollinger Band. Currently, transactions in various spot markets are relatively moderate, with downstream enterprises mostly making just-in-time procurement. High inventory has exerted some pressure on zinc price rises, and subsequent domestic inventory performance will be closely watched.

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 do not constitute decision-making advice.