SMM Analysis：Since the National Day holiday, the LME zinc backwardation structure has surged rapidly. As of October 21, 2025, the LME zinc Cash-3M backwardation climbed to $299/mt, hitting a multi-year high, with LME outperforming SHFE. Market concerns over a "squeeze" have intensified. From a fundamental perspective, what are the underlying reasons, and what is the outlook......

[Fundamentals Weigh on Zinc Prices, SHFE Zinc Struggles to Rise]: The most-traded SHFE zinc 2512 contract opened at 21,955 yuan/mt, dipped to 21,940 yuan/mt early in the session, then fluctuated throughout the day, hitting a high of 22,030 yuan/mt before finally closing up at 22,000 yuan/mt, an increase of 20 yuan/mt, or 0.09%.

According to SMM data, as of October 21, inventory in Guangdong reached 53,400 mt, approaching a three-year peak, and the supply-demand imbalance has become prominent in the short term. How will premiums and discounts in Guangdong evolve going forward?First, looking at the current domestic fundamentals:

[SMM Zinc Morning Comment] Overnight, the most-traded SHFE zinc 2512 contract opened at 22,010 yuan/mt. At the beginning of the session, bulls increased their positions, pushing SHFE zinc up to a high of 22,030 yuan/mt, after which it fluctuated downward, touching a low of 21,930 yuan/mt. It finally closed up at 21,980 yuan/mt, rising by 10 yuan/mt, a gain of 0.05%. Trading volume decreased to 51,403 lots, while open interest increased by 1,901 lots to 132,000 lots.

[SMM Morning Meeting Minutes: Overseas Low Inventory Continues to Provide Support, LME Zinc Center Rises] Overnight, the LME zinc contract opened at $2,975.5/mt. At the beginning of the session, it briefly dipped to a low of $2,973/mt, then fluctuated upward as bulls increased their positions, reaching a high of $3,008/mt during the night session. Subsequently, due to insufficient upward momentum, it fluctuated downward, ultimately closing up at $2,993.5/mt, an increase of $17.5/mt (a gain of 0.95%). Trading volume rose to 12,000 lots, and open interest increased by 12,754 lots to 224,000 lots.

[LME Drives SHFE Zinc Higher, Focus on Subsequent Fundamental Performance]: The most-traded SHFE zinc 2511 contract opened at 21,955 yuan/mt. After opening, SHFE zinc fluctuated above the daily average line, touched a low of 21,930 yuan/mt near the early session, then climbed to a high of 22,045 yuan/mt, before pulling back slightly and finally closing up at 21,970 yuan/mt.

The price of low-grade zinc oxide stabilized after rising in September, while the price of zinc calcine continued to increase in October. What will be the subsequent price trend?

According to the latest customs data, China's imports of unwrought zinc alloy in September stood at 3,792.09 mt, down 6.31% YoY, while exports reached 650.15 mt, surging 387.26% YoY. In September, China's imports of unwrought zinc alloy amounted to 3,792.09 mt, up 16.17% MoM but down 6.31% YoY. Cumulatively, from January to September, imports totaled 33,783.56 mt, a decrease of 2.64% YoY.

[SMM Zinc Morning Comment] Overnight, the most-traded SHFE zinc 2512 contract opened at 21,915 yuan/mt, briefly dipped to a low of 21,815 yuan/mt in early trading, then rose rapidly as bulls increased positions, touching a high of 21,970 yuan/mt, and finally closed up at 21,960 yuan/mt, gaining 110 yuan/mt, an increase of 0.5%. Trading volume decreased to 44,466 lots, while open interest increased by 2,585 lots to 128,000 lots.

[SMM Morning Meeting Minutes: Macro Sentiment Boosts LME Zinc Center Rises] Overnight, the LME zinc contract opened at $2,938/mt. At the beginning of the session, it briefly dipped lower as bears reduced positions, then rose. During European trading hours, it touched a low of $2,935/mt, after which further bear position reductions led the price to fluctuate upward, moving considerably near the daily average line. In the night session, continued bear position reductions pushed LME zinc higher, reaching a peak of $2,982.5/mt, and finally settled up at $2,976/mt, gaining $33.5/mt, an increase of 1.14%. Trading volume increased to 8,609 lots, while open interest fell by 13,012 lots to 211,000 lots.