LME Zinc Maintains High Levels, Awaiting Further Macro Guidance [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for October 29

Futures: Overnight, LME zinc opened at $3,051/mt. After opening, it fluctuated downward, hitting a low of $3,008.5/mt, then pulled back from the low, touched a high of $3,068/mt, and hovered at highs before finally closing down at $3,056.5/mt, down $2/mt or 0.07%. Trading volume increased to 11,155 lots, and open interest rose by 264 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened at 22,355 yuan/mt. After opening, it maintained a fluctuating trend briefly, then rose rapidly, touched a high of 22,435 yuan/mt, and hovered at highs before finally closing up at 22,410 yuan/mt, up 100 yuan/mt or 0.45%. Trading volume decreased to 54,176 lots, and open interest fell by 2,163 lots to 119,000 lots.

Macro: Trump: Fed Chairman Powell is either incompetent or bad, will leave within "a few months"; US Commerce Secretary: Will sign a $490 billion investment agreement in Japan; Israel claims Hamas violated ceasefire agreement, orders multiple airstrikes on Gaza; ADP releases weekly estimates for US National Employment Report; China and ASEAN sign upgraded protocol for version 3.0 of free trade zone; SSE's Qiu Yong: Flexibly support listing of "hard tech" enterprises with potential to compete globally; Deputy Head of National Financial Regulatory Administration: Drafting document with Ministry of Science and Technology to support technological innovation in insurance industry.

Spot Market:

Shanghai: Yesterday, purchasing sentiment for refined zinc in Shanghai was 2.17, selling sentiment was 2.53. Spot zinc ingot sales in Shanghai were limited, traders showed some reluctance to budge on prices, spot premiums rose slightly MoM, but futures also strengthened. Downstream enterprises were hesitant to purchase at high levels, resulting in weak buying; overall market activity was mainly among traders.

Guangdong: Yesterday, purchasing sentiment for refined zinc in Guangdong was 1.98, selling sentiment was 2.44. Overall, futures center continued to rise. End-user purchasing enthusiasm in Guangdong was low; spot transactions were mainly among traders. Affected by weak spot transactions, Guangdong premiums and discounts edged down.

Tianjin: Yesterday, purchasing sentiment for refined zinc in Tianjin was 1.87, selling sentiment was 2.37. Zinc prices continued to fluctuate at highs; downstream restocked based on rigid demand, mainly consuming inventory. As new long-term contracts began execution, many downstream players waited for contract deliveries. Traders' overall offers remained slightly stable; overall market transactions were weak.

Ningbo: Recently arrived zinc ingots were mostly pre-sold; spot circulation volume saw little replenishment. Yesterday, almost no traders in Ningbo offered quotes; with limited supply, downstream enterprises showed active inquiry sentiment.

Social Inventory: On October 27, LME zinc inventory decreased by 1,800 mt to 35,250 mt, down 4.86%. According to SMM communication, as of October 27, the total zinc ingot inventory in seven regions tracked by SMM was 163,500 mt, down 1,800 mt from October 20 but up 1,400 mt from October 23, indicating an increase in domestic inventory.

Zinc Price Forecast: Overnight, LME zinc formed a bullish candlestick, supported by the 20-day moving average. The market awaits the upcoming US Fed interest rate decision, while the US dollar index maintains a fluctuating trend. However, LME zinc inventory continued to decline, and the LME backwardation structure remained strong, supporting LME zinc to fluctuate at highs. Continued attention should be paid to subsequent macro guidance. Overnight, SHFE zinc formed a bullish candlestick, supported by the 10-day moving average. The export window remains open, and LME zinc prices continue to boost SHFE zinc trends. However, domestic smelters are operating actively, while peak season consumption has underperformed expectations. The fundamentals may provide insufficient support for zinc prices, and SHFE zinc is expected to maintain a fluctuating trend.

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. They are for reference only and do not constitute decision-making advice.