LME Inventory Declines Again, LME Zinc Fluctuates Upward [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 4

Futures: Overnight, LME zinc opened at $3,054.5/mt. It fluctuated upward along the daily average line in early trading, hitting a high of $3,115/mt before closing, and finally settled at $3,108/mt, up $58/mt, a gain of 1.9%. Trading volume increased to 11,043 lots, and open interest rose by 1,194 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened higher with a gap at 22,610 yuan/mt. During the session, it fluctuated around the daily average line, with an amplitude not exceeding 200 yuan/mt, reaching a high of 22,700 yuan/mt. It finally settled at 22,670 yuan/mt, up 185 yuan/mt, a gain of 0.82%. Trading volume decreased to 52,375 lots, while open interest increased by 1,085 lots to 120,000 lots.

Macro: US manufacturing activity contracted for the eighth consecutive month in October; the US Treasury Department estimated borrowing of $569 billion in Q4, $21 billion less than the July estimate; US Fed Governor Cook: A December interest rate cut is possible, but it will depend on subsequent incoming information; OPEC Secretary General: Global oil demand is not expected to peak in the short term; Peru decided to sever diplomatic relations with Mexico; The October RatingDog China Manufacturing PMI fell to 50.6; The People's Bank of China and the Bank of Korea renewed their bilateral local currency swap agreement.

Spot Market:

Shanghai: The purchase willingness for refined zinc in Shanghai was 2.18, while the sales willingness was 2.48. Futures held up well, and traders mainly focused on selling today. Spot quotes were basically stable. Downstream buyers were cautious of high prices and maintained purchasing as needed, showing little enthusiasm for purchasing. Spot trades showed mediocre performance.

Guangdong: The purchase willingness for #0 zinc in Guangdong was 1.93, while the sales willingness was 2.45. Overall, zinc prices maintained a fluctuating trend today. Downstream purchasing was primarily for rigid demand, with low enthusiasm. Coupled with ample spot availability in the Guangdong market, spot premiums and discounts remained under pressure.

Tianjin: The purchase willingness for refined zinc in Tianjin was 1.89, while the sales willingness was 2.41. Zinc prices continued to rise today. Downstream buyers were cautious of high prices, resulting in fewer inquiries. Large plants still focused on long-term contracts. Traders' quotes were generally stable, with trading mainly among traders. Overall market transactions were poor.

Ningbo: The number of selling traders increased, and spot premium quotes dropped back slightly. Some enterprises continued cargo pick-up for pre-sold zinc ingots, showing low willingness to purchase spot cargo from the market. Other enterprises basically purchased as needed.

Social Inventory: On November 3, LME zinc inventory decreased by 1,475 mt to 33,825 mt, an increase of 4.18%. According to SMM communication, as of November 3, the total zinc ingot inventory in seven regions tracked by SMM was 161,700 mt, an increase of 200 mt compared to October 30, and a decrease of 1,800 mt compared to October 27. Domestic inventory increased slightly.

Zinc Price Forecast: The LME zinc contract recorded a large bullish candlestick overnight, with various moving averages providing support below and the KDJ indicator expanding upward. Expectations for a US Fed interest rate cut in December increased overnight, coupled with LME zinc inventory hitting a new low, causing LME zinc to fluctuate upward. SHFE zinc recorded a three-day winning streak overnight, with the center of the daily candlestick rising and the MACD bullish candlestick expanding. Driven by the overnight LME performance, bulls poured funds into SHFE zinc, breaking through the highs seen since August. Combined with supply-side disruptions, zinc prices are expected to fluctuate at highs.

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 do not constitute decision-making advice.