Macro Sentiment Boosts LME Zinc Center Upward [SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes October 21
Futures: Overnight, LME zinc opened at $2,938/mt. At the beginning of the session, LME zinc briefly explored lows as bears reduced positions, then rose. During European trading hours, it touched a low of $2,935/mt, after which bears further reduced positions, causing LME zinc to fluctuate upward and trade considerably near the daily average line. In the night session, continued position reductions by bears pushed LME zinc higher, touching a high of $2,982.5/mt, and it finally closed up at $2,976/mt, up $33.5/mt, a gain of 1.14%. Trading volume increased to 8,609 lots, while open interest fell by 13,012 lots to 211,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened at 21,915 yuan/mt. It briefly moved lower at the start, touching a low of 21,815 yuan/mt, then bulls increased positions, quickly pulling SHFE zinc up to a high of 21,970 yuan/mt. It finally closed up at 21,960 yuan/mt, up 110 yuan/mt, a gain of 0.5%. Trading volume decreased to 44,466 lots, while open interest increased by 2,585 lots to 128,000 lots.
Macro:
The US and Australia signed a critical minerals agreement, with Trump stating there would be so much rare earth and minerals that it would be overwhelming; The White House: Australian pension fund investments in the US are expected to increase by approximately $1 trillion over the next decade; Hassett: Government shutdown could end this week, stronger measures considered if it continues; Japan's LDP and Innovation Party formally sign coalition agreement, Sanae Takaichi secures victory; National Bureau of Statistics (NBS): China's GDP grew 5.2% YoY in the first three quarters; The latest loan prime rate (LPR) remained unchanged, with both the one-year and five-year LPR holding steady.
Shanghai: Yesterday, the buying sentiment for refined zinc in the Shanghai area was 2.3, while the selling sentiment was 2.53. Market traders had ample offerings, spot zinc ingot quotes saw a noticeable pullback, futures maintained a fluctuating trend, downstream enterprises showed low purchasing sentiment, spot procurement remained just-in-time, and market activity was mostly inter-trader transactions.
Guangdong: Yesterday, the buying sentiment for refined zinc in the Guangdong area was 2.03, while the selling sentiment was 2.31. Overall, zinc prices maintained a fluctuating trend, downstream purchases were still primarily just-in-time procurement, with some enterprises fixing prices on Friday afternoon. Cargo pick-up by downstream users over the weekend led to a slight decrease in inventory yesterday, coupled with a contraction in the price spread between futures contracts, spot premiums and discounts rose slightly.
Tianjin: Yesterday, the buying sentiment for refined zinc in the Tianjin area was 2.21, while the selling sentiment was 2.37. Zinc prices continued to fluctuate at lows, but downstream consumption remained relatively weak, with slow goods movement. Raw material procurement enthusiasm was low, and amid sluggish sales, traders slightly lowered their quotes, resulting in poor overall market transactions.
Ningbo: Long-term contract zinc ingots from Yongchang, Anning, etc., arrived, but overall market supply remained tight. Futures maintained a fluctuating trend, downstream users restocked as needed yesterday, and traders maintained high spot premium quotes. Continued attention will be paid to subsequent zinc ingot arrivals.
Social inventory: On October 20, LME zinc inventory decreased by 700 mt or 1.84% to 37,325 mt. According to SMM communication, as of this Monday (October 20), the total zinc ingot inventory in seven SMM-tracked regions was 165,300 mt, up 2,200 mt from October 13 and up 2,600 mt from October 16, indicating an increase in domestic inventory.
Zinc price forecast: Overnight, the LME zinc contract recorded a large bullish candlestick. LME zinc continued destocking, with risks remaining, while domestically released economic data exceeded market expectations, boosting market confidence. With fundamentals and macro factors aligning, the LME zinc price center rose. LME zinc is expected to fluctuate today. Overnight, the SHFE zinc contract recorded a small bullish candlestick. Macro side, China's GDP grew 5.2% YoY in the first three quarters, and China's value-added industrial output above the designated size increased 6.5% YoY in September. Macro sentiment improved, and exports still hold some expectations, with a certain volume of spot zinc already exported. However, the domestic oversupply structure remains unchanged. SHFE zinc is expected to fluctuate mainly 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, for reference only and not constituting decision-making advice.