Overseas low inventory continues to provide support, LME zinc center rises [SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes October 22
Futures: Overnight, LME zinc opened at $2,975.5/mt. At the beginning of the session, it briefly touched 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 and finally closed up at $2,993.5/mt, up $17.5/mt, a gain of 0.95%. Trading volume increased to 12,000 lots, and open interest increased by 12,754 lots to 224,000 lots. 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 the contract up to a high of 22,030 yuan/mt. It then fluctuated downward, touching a low of 21,930 yuan/mt, and finally closed up at 21,980 yuan/mt, up 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.
Macro:
Citigroup turned bearish on gold prices, expecting them to fall to $4,000 within the next three months; Takachi Naomachi was elected Prime Minister of Japan; Europe and Ukraine are reportedly drafting a 12-point Russia-Ukraine peace plan; Foreign media: Russia reiterated its stance on full control of Donbass to the US last weekend; China and the Netherlands exchanged views on issues including Nexperia; Ministry of Culture and Tourism: Domestic resident trips in the first three quarters of 2025 increased 18.0% YoY.
Shanghai: Yesterday, the purchasing sentiment for refined zinc in the Shanghai area was 2.25, while the selling sentiment was 2.55. Market traders mainly focused on selling, but as zinc futures rose slightly to around 22,000 yuan/mt, downstream buyers adopted a wait-and-see approach and were not active in spot procurement. Overall trading performance was weak yesterday, leading to a pullback in spot premiums.
Guangdong: Yesterday, the purchasing sentiment for refined zinc in the Guangdong area was 2.05, while the selling sentiment was 2.34. Overall, premiums and discounts in Guangdong are currently operating at low levels. Some traders showed low willingness to sell, with a certain reluctance to budge on prices. Coupled with some just-in-time procurement from downstream users, spot premiums and discounts rose slightly yesterday.
Tianjin: Yesterday, the purchasing sentiment for refined zinc in the Tianjin area was 2.13, while the selling sentiment was 2.46. Zinc prices rebounded slightly yesterday, but downstream buyers were cautious due to high prices, resulting in low purchasing enthusiasm. With sluggish sales, traders slightly lowered their offers. Trading was mainly among traders, and overall market transactions were poor.
Ningbo: Affected by the typhoon, the arrival of Qilin zinc ingot shipments was delayed. Recently, the supply of zinc ingots in the Ningbo market has been limited. Amid tight supply, spot premiums in Ningbo continued to rise yesterday, with downstream enterprises actively inquiring and restocking. It is expected that as zinc ingots arrive gradually towards the end of the week and next week, market premiums will pull back.
Social Inventory: On October 21, LME zinc inventory decreased by 50 mt or 0.13% to 37,275 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, LME zinc recorded a small bullish candlestick, testing the 5- and 10-day daily averages. LME zinc continued to maintain low inventory, with risks still present, while macro sentiment remained relatively optimistic, and the center of LME zinc rose. LME zinc is expected to trade within a range today. Overnight, SHFE zinc recorded a small bearish candlestick, with the 10- and 20-day daily averages forming resistance. Low overseas inventory and continuously declining domestic TC continued to support zinc prices. However, after the export window opened, domestic zinc ingot exports remained relatively limited, making it difficult to change the oversupply pattern. 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, for reference only and not intended as decision-making advice.