Impact of Economic Data and Low Inventory Support, SHFE and LME Center Rose This Week [SMM Market Review - Weekly Price Commentary]

       LME Zinc: At the beginning of the week, the US October ISM Manufacturing PMI recorded 48.7, marking the eighth consecutive month of contraction, which heightened market risk aversion sentiment. Meanwhile, LME inventory data showed that overseas zinc inventory continued to decrease by 1,475 mt to 33,825 mt, hitting a new low for the year, supporting a continuous rise in LME zinc. Subsequently, internal disagreements within the US Fed regarding interest rate cuts led to a continued uptrend in the US dollar index, and under the strong US dollar, LME zinc faced pressure and moved lower. Then, the US October ADP employment figure increased by 42,000, exceeding expectations; this data alleviated concerns about the US economy and labour market, but increased uncertainty around US Fed interest rate cuts, causing the center of LME zinc to continue its downward trend. Following that, data from the Chicago Fed indicated that the October unemployment rate was approximately 4.36%, a four-year high, suggesting relative weakness in the employment market, which led to a decline in the US dollar index and a slight rise in LME zinc. Subsequently, LME zinc pulled back, but supported by low overseas inventory, it rose again. As of 15:00 this Friday, LME zinc recorded $3,057.5/mt, up $7.5/mt, an increase of 0.25%.

       SHFE Zinc: At the beginning of the week, SHFE zinc briefly continued its downward trend from the previous week. Subsequently, the LME continued to rise, and from a macro perspective, China's October RatingDog Manufacturing PMI recorded 50.6; although it remained above the 50 mark, it overall fell short of expectations, leading to a gradual increase in market risk aversion sentiment. From a fundamental perspective, domestic smelter production in November is expected to see a certain degree of decline. Driven by the strong momentum from the LME and the resonance of domestic macro and fundamental factors, SHFE zinc rose rapidly. However, domestic zinc downstream consumption remained relatively mediocre, and as of this Monday, domestic social inventory saw a slight buildup to 161,700 mt. In the short term, the domestic market oversupply persists, weakening support for SHFE zinc, which led to a rapid decline. Subsequently, as domestic TCs continued to decrease, there were certain expectations for production cuts in refined zinc, coupled with the export window still being open, providing strong support at the bottom for SHFE zinc. However, with domestic consumption being relatively weak, SHFE zinc maintained a fluctuating trend. As of 15:00 this Friday, SHFE zinc recorded 22,720 yuan/mt, up 365 yuan/mt, an increase of 1.63%.