Interest Rate Cut Expectations Combined with Safe-Haven Sentiment, LME Zinc Center Slightly Rises [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $2,944.50/mt. At the beginning of the session, LME zinc fluctuated considerably around the daily average line, hitting a low of $2,940.00/mt. Entering the night session, LME zinc continued to rise, reaching a high of $2,976/mt, and finally closed up at $2,968.00/mt, up $27.5/mt, a gain of 0.94%. Trading volume decreased to 73,273 lots, and open interest increased by 749 lots to 225,000 lots. Overnight, the most-traded SHFE zinc 2511 contract opened at 21,960 yuan/mt. Early in the session, bulls reduced positions, pushing SHFE zinc down to a low of 21,920 yuan/mt. Subsequently, bears reducing positions drove SHFE zinc up above the daily average line to a high of 22,020 yuan/mt. Towards the end of the session, the price center of SHFE zinc moved down slightly, and it finally closed up at 21,995 yuan/mt, up 55 yuan/mt, a gain of 0.25%. Trading volume decreased to 39,144 lots, and open interest decreased by 7,453 lots to 79,622 lots.

Macro: Multiple US Fed officials laid the groundwork for further interest rate cuts; two US regional banks disclosed loan issues involving fraud allegations; a day before the Ukrainian president's visit to the White House to discuss "Tomahawk" missiles, the US and Russian presidents held a phone call; foreign media: White House plans to extend tariff exemptions for imported auto parts; French government survives no-confidence motion vote; World Gold Council research head: Gold market not yet saturated; Will China and the US hold a new round of economic and trade talks? Ministry of Commerce responds (US hints at "tariffs for rare earths," Foreign Ministry responds); Shanghai Gold Exchange: Prepare for recent market risk control work.

Spot:

Shanghai: The purchase willingness for refined zinc in the Shanghai region was 2.24, and the sales willingness was 2.46. Driven by recent bill profit opportunities, market traders' purchases increased. Yesterday, spot availability in the Shanghai market was limited, and spot premiums continued to rise. Although futures prices dropped slightly below 22,000 yuan/mt, they did not meet downstream psychological price levels. Downstream purchase enthusiasm was poor, and overall trading was mainly among traders.

Guangdong: The purchase willingness for refined zinc in the Guangdong region was 1.98, and the sales willingness was 2.27. Futures prices maintained rangebound fluctuations, downstream wait-and-see sentiment was relatively strong, and purchases remained primarily for rigid demand. Coupled with gradually increasing inventory in Guangdong, traders slightly lowered premiums/discounts to facilitate transactions. Additionally, with contract rollover pricing in Guangdong yesterday, spot premiums/discounts declined.

Tianjin: The purchase willingness for refined zinc in the Tianjin region was 2.24, and the sales willingness was 2.31. Yesterday, zinc prices pulled back slightly, but downstream consumption remained relatively subdued. Most downstream participants adopted a wait-and-see attitude yesterday, inquiries decreased, trader offers held steady with minor adjustments, and overall market trading was poor.

Ningbo: Futures prices continued to decline slightly, trader spot offers edged higher, but downstream enterprises still held some raw material inventory, leading to low purchase willingness. Spot purchases yesterday remained for rigid demand, showing no significant improvement compared to the previous day.

Inventory: On October 16, LME zinc inventory decreased by 50 mt to 38,300 mt, down 0.13%.SMM communication and understanding, as of Thursday this week (October 16), the total zinc ingot inventory in SMM's seven regions was 162,700 mt, up 12,500 mt from October 9 and down 400 mt from October 13, indicating a decrease in domestic inventory.

Zinc Price Forecast: LME zinc recorded a bullish candlestick overnight, with the 20-day daily average exerting pressure above and the lower Bollinger Band providing support below. Macro perspective, several US Fed officials recently laid the groundwork for further interest rate cuts, while turmoil in the US credit market boosted risk aversion sentiment. Inventory side, overseas zinc inventory remains at low levels. Under multiple influences, the LME zinc price center edged up slightly. SHFE zinc recorded a bullish candlestick overnight, with various daily averages exerting pressure above and the lower Bollinger Band providing support below. Currently, the domestic fundamentals remain in an oversupply situation, with end-use consumption showing no significant improvement. SHFE zinc is expected to continue fluctuating in the short term, with attention on subsequent actual export 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.