Trade tensions have eased, and LME zinc continues to rise [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes October 28

Futures: Overnight, LME zinc opened at $3,044/mt. It initially touched a low of $3,029/mt, then fluctuated upward basically along the daily average line, reaching an intraday high of $3,060/mt, and finally closed up at $3,058.5/mt, up $39/mt or 1.29%. Trading volume decreased to 10,796 lots, and open interest fell by 1,274 lots to 222,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened at 22,400 yuan/mt. It initially touched a high of 22,440 yuan/mt, then fluctuated basically around the daily average line. Although it dipped slightly to a low of 22,345 yuan/mt during the session, it subsequently rebounded near the daily average line, finally closing up at 22,410 yuan/mt, up 45 yuan/mt or 0.2%. Trading volume decreased to 54,980 lots, and open interest fell by 1,136 lots to 120,000 lots.

Macro: Sources: OPEC+ leans towards another small production increase; Zelenskyy: Ceasefire plan to be formulated with allies in seven to ten days; Qualcomm launches new chip, enters data center market to challenge Nvidia; Philippine central bank official: Gold reserves "excessive", should sell some for profit; Pan Gongsheng: The central bank will resume open market trading of government bonds; Wu Qing: CSRC will initiate the implementation of reforms to deepen the growth enterprise market; Zhu Hexin: Focusing on trade facilitation, SAFE will soon issue nine policy measures.

Spot Market:

Shanghai: Yesterday, the purchase willingness for refined zinc in the Shanghai area was 2.23, and the sales willingness was 2.57. Entering the new month for long-term contracts, market traders mainly focused on selling. Futures maintained a fluctuating trend, while downstream users continued purchasing as needed. Spot trades showed no improvement WoW. Overall, spot premiums held steady with a slight firmness.

Guangdong: Yesterday, the purchase willingness for refined zinc in the Guangdong area was 2, and the sales willingness was 2.42. Overall, zinc prices maintained a fluctuating trend yesterday. Downstream buyers were not highly active in purchasing due to recent cargo pick-ups and the early delivery of some enterprises' long-term contracts for the next month. Enterprises with purchase demand mostly engaged in just-needed restocking. Market transactions were relatively ordinary yesterday, with spot premiums and discounts remaining flat.

Tianjin: Yesterday, the purchase willingness for refined zinc in the Tianjin area was 1.91, and the sales willingness was 2.39. Zinc prices continued to fluctuate at highs yesterday. Downstream buyers were cautious about high prices and purchased cautiously, with some just-needed restocking, mainly consuming existing inventory. Furthermore, as new long-term contracts began execution, many downstream buyers awaited the arrival of contract goods. Traders' overall offers held steady with a slight firmness. The overall market performance was poor.

Ningbo: Some zinc ingots arrived in Ningbo over the weekend. Some downstream users picked up pre-sold zinc ingots they had previously purchased, resulting in low willingness to purchase zinc ingots from the market. Yesterday, trader offers showed some divergence, and spot premiums for some cargoes pulled back. Subsequent arrivals of zinc ingots need continuous monitoring.

Social Inventory: On October 24, LME zinc inventory decreased by 550 mt to 37,050 mt, a decrease of 1.46%. According to SMM communication and understanding, as of October 27, the total SMM zinc ingot inventory in seven regions was 163,500 mt, a decrease of 1,800 mt compared to October 20, and an increase of 1,400 mt compared to October 23, indicating an increase in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bullish candlestick, with support provided by the 5-day daily average line below. China and the US conducted economic and trade consultations, easing global trade tensions. The US dollar index continued to weaken, coupled with no improvement in low LME inventory, multiple factors supported LME zinc to continue fluctuating upward. Overnight, SHFE zinc recorded a bullish candlestick, with support provided by the 5-day daily average line below. The LME zinc price boosted the trend of SHFE zinc. In addition, market macro sentiment improved amid China-US negotiations, and the zinc ingot export window remained open, supporting SHFE zinc's center to rise.

Data Source Statement: Except for public information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.