Bears increased positions to suppress prices, LME zinc center moved lower [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 6

Futures: Overnight, LME zinc opened at $3,073.5/mt. At the beginning of the session, LME zinc fluctuated around the daily average line. During European trading hours, it touched a high of $3,094/mt, then bears sold at highs, pushing the price center down to around $3,050/mt, easing concerns about the US. It finally closed down at $3,054.5/mt, down $23/mt, a decrease of 0.75%. Trading volume decreased to 13,870 lots, and open interest increased by 1,503 lots to 229,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened at 22,605 yuan/mt. At the beginning of the session, it quickly touched a high of 22,640 yuan/mt, then fluctuated around the daily average line, finally closing down at 22,605 yuan/mt, down 5 yuan/mt, a decrease of 0.02%. Trading volume decreased to 47,267 lots, and open interest increased by 999 lots to 113,000 lots.

Macro: Conservative Chief Justice and others questioned the rationality of tariffs, reducing Trump's probability of winning the lawsuit; the US October labour market showed signs of stabilization; Trump blamed the election defeat on the government shutdown, demanding an end to the "filibuster"; Trump claimed US stocks would hit new highs again, expecting Q3 GDP growth of 4.2% or higher; Putin: If the US resumes nuclear tests, Russia will take reciprocal countermeasures; Kremlin: No plans for dialogue between Putin and Trump in the near future.

Spot Market:

Shanghai: The purchase sentiment for refined zinc in Shanghai was 2.34, and the sales sentiment was 2.42. The export window remained open, traders in the Shanghai market sold limited quantities, purchase sentiment rose, spot premiums continued to increase yesterday. Although futures pulled back slightly, it did not reach downstream psychological price levels, downstream mostly purchased based on demand, limited point pricing occurred, inter-trader spot trades were active yesterday.

Guangdong: The purchase sentiment for 0# zinc in Guangdong was 1.96, and the sales sentiment was 2.48. Overall, the zinc price center declined yesterday, downstream purchase enthusiasm increased slightly, trader sales improved somewhat, spot premiums and discounts rose, but the current market trading atmosphere remains relatively poor, downstream purchase sustainability is insufficient.

Tianjin: The purchase sentiment for refined zinc in Tianjin was 1.81, and the sales sentiment was 2.35. Zinc prices dropped back slightly yesterday, some downstream restocked for rigid demand, but bearish sentiment persisted, purchases were limited, trader sales held steady slightly, trading was mainly among traders, overall market turnover improved slightly compared to the previous day.

Ningbo: The futures market pulled back slightly in the morning, market traders raised spot quotations, self pick-up zinc ingot prices from warehouses continued to rise, but low prices for dock-delivered zinc ingots persisted, there was some divergence in spot premiums in the market, downstream purchased based on orders, market spot trades showed no significant improvement compared to the previous day.

Social Inventory: On November 5, LME zinc inventory increased by 175 mt to 34,000 mt. According to SMM communication, as of November 3, the total SMM zinc ingot inventory across seven regions was 161,700 mt, up by 200 mt from October 30 and down by 1,800 mt from October 27, indicating a slight increase in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bearish candlestick, with the daily candlestick's center shifting downward. As economic data eased concerns about the US economy and labour market, expectations for US Fed interest rate cuts increased, the US dollar fluctuated at highs, and expectations for LME shipments to delivery warehouses rose, prompting bears to enter the market and push down the LME zinc price center. Overnight, SHFE zinc recorded a doji, with the bullish MACD candlestick narrowing. Overnight, SHFE zinc consolidated at highs, supported by low LME inventory and tight domestic supply. Zinc prices are temporarily not considered for short selling; attention should be paid to domestic exports and overseas shipments to delivery warehouses.

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, and are for reference only, not constituting decision-making advice.