U.S. Dollar Boosted, LME Zinc Center Shifted Lower [SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes for October 20
Futures: Last Friday, LME zinc opened at $2,963/mt. At the beginning of the session, bulls reduced their positions, causing LME zinc to fluctuate downward. During European trading hours, it touched a low of $2,914/mt, then fluctuated upward, reaching a high of $2,972/mt in the night session. It finally closed down at $2,942.5/mt, down $25.5/mt, a decrease of 0.86%. Trading volume increased to 11,000 lots, while open interest decreased by 279 lots to 224,000 lots. Last Friday, the most-traded SHFE zinc 2512 contract opened lower with a gap at 21,830 yuan/mt, which was also the intraday low. Subsequently, bulls increased their positions, leading to a brief rise in SHFE zinc. However, due to insufficient upward momentum, it gradually pulled back and finally closed up at 21,855 yuan/mt, up 25 yuan/mt, an increase of 0.11%. Trading volume decreased to 47,508 lots, while open interest increased by 7,282 lots to 116,000 lots.
Macro:
Trump signed an executive order imposing a 25% tariff on imported medium and heavy-duty trucks; Trump stated the US might not provide "Tomahawk" missiles to Ukraine, and his meeting with Putin would be a "bilateral meeting"; The head of the Russian Direct Investment Fund mentioned that Russia and the US have begun discussions on jointly building a tunnel under the Bering Strait; A member of Hamas's political bureau stated that Hamas plans a ceasefire lasting 3 to 5 years; China and the US agreed to hold a new round of economic and trade consultations as soon as possible; The Israeli military claimed Hamas violated the ceasefire agreement by opening fire three times; Trump and Zelenskyy had another "White House dispute".
Shanghai: Last Friday, the purchasing sentiment for refined zinc in the Shanghai area was 2.32, while the selling sentiment was 2.5. Spot cargo availability remained limited in the market. Traders maintained high spot quotations, while downstream enterprises continued to make just-in-time procurement, preferring to purchase low-priced zinc ingots with factory delivery. Purchase inquiries were generally subdued, and overall trading was primarily among traders.
Guangdong: Last Friday, the purchasing sentiment for refined zinc in the Guangdong area was 2.05, while the selling sentiment was 2.25. Overall, the price center for zinc continued to decline last Friday. However, according to trader feedback, downstream enterprises mainly engaged in just-in-time procurement. Spot cargo availability in the market was sufficient, and spot premiums and discounts continued to decrease.
Tianjin: Last Friday, the purchasing sentiment for refined zinc in the Tianjin area was 2.27, while the selling sentiment was 2.3. Zinc prices pulled back slightly last Friday, but downstream consumption remained relatively weak. Downstream buyers still held a bearish view, primarily engaging in point price transactions. Traders' quotations held steady with minor adjustments, and overall market transactions were poor.
Ningbo: As previously arrived zinc ingots were gradually consumed, fewer traders were selling in Ningbo last Friday. With scarce availability, spot premiums increased significantly. Downstream enterprises continued to purchase based on demand. With the arrival of long-term contract zinc ingots next week, spot quotations in Ningbo are expected to have limited room for increase.
Social Inventory: On October 17, LME zinc inventory decreased by 275 mt, or 0.72%, to 38,025 mt. According to SMM communication, as of last Thursday (October 16), the total zinc ingot inventory in seven SMM-tracked regions was 162,700 mt, an increase of 12,500 mt compared to October 9, but a decrease of 400 mt compared to October 13. Domestic inventory decreased.
Zinc Price Forecast: Last Friday, the LME zinc contract recorded a long lower shadow bearish candlestick. Trump softened his previous tough stance on trade, boosting the US dollar index and putting pressure on nonferrous metals. However, LME zinc inventory remained relatively tight, providing some support to prices. LME zinc is expected to trade within a range today. Last Friday, SHFE zinc recorded a bearish candlestick with no lower shadow. Macro sentiment remained bearish, and domestic surplus expectations persisted. The spot export window opened, with a certain volume of spot cargo already exported. The domestic oversupply situation remained unchanged. SHFE zinc is expected to trade mainly within a range today.
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. The data are for reference only and do not constitute decision-making advice.