Overseas Low Inventory Logic Holds Up Well, SHFE and LME Center Continues to Rise During the Week [SMM Market Review - Weekly Price Commentary]

       LME Zinc: At the beginning of the week, China's better-than-expected GDP data and market optimism about the US avoiding a government shutdown jointly boosted market sentiment, coupled with continued declines in overseas inventories, pushing LME zinc higher. Subsequently, market news indicated that the US and India are expected to reach a trade agreement, and Trump recently signaled cautious optimism regarding US-China trade relations, further lifting positive sentiment and driving LME zinc upward. Then, as overseas inventories continued to decrease, the LME zinc backwardation structure widened to over $300/mt, while the US dollar index paused its rally and started to pull back, providing support for LME zinc to continue rising. Later, as the market awaited upcoming CPI and consumer-related data releases, LME zinc experienced a brief pullback during the wait. However, strong low inventory logic once again pushed LME zinc higher. Subsequently, LME zinc maintained a fluctuate rangebound trend. As of 15:00 Friday, LME zinc recorded $3,024/mt, up $81.5/mt, a gain of 2.77%.

       SHFE Zinc: At the beginning of the week, SHFE zinc continued last week's fluctuating trend. Subsequently, data showed China's GDP grew 5.2% YoY in the first three quarters. The positive data gradually fostered market optimism, but constrained by currently mediocre consumption, SHFE zinc only saw a slow rise. Then, overseas inventories decreased again by nearly 2,000 mt, and the LME zinc backwardation structure continued to widen to over $300/mt. Low inventory supported further gains in LME zinc, prompting SHFE zinc to follow suit quickly. Later, influenced by a decline in LME zinc, SHFE zinc opened lower with a gap. However, according to SMM data, as of Thursday, domestic social inventory slightly decreased to 162,100 mt, providing support for SHFE zinc to continue rising. Nevertheless, with domestic consumption showing mediocre performance and social inventory, although reduced, still above 160,000 mt, SHFE zinc declined. Subsequently, after the conclusion of the domestic Fourth Plenum, authorities reiterated opposition to "involution" competition, leading to relatively positive market sentiment and a rise in SHFE zinc. As of 15:00 Friday, SHFE zinc recorded 22,355 yuan/mt, up 525 yuan/mt, a gain of 2.4%.