Overseas inventories increase slightly, LME zinc maintains fluctuating trend [SMM Morning Meeting Summary]

Futures: Last Friday, LME zinc opened at $3,050/mt. At the beginning of the session, the price center fluctuated upward, touching a high of $3,072/mt, then pulled back. During the night session, it once fell to $3,045.5/mt, fluctuated and rebounded towards the end of the session, and finally closed up at $3,066.5/mt, up $15.5/mt or 0.51% from the previous trading day. Trading volume decreased to 91,783 lots, and open interest fell by 4,145 lots to 221,000 lots. Last Friday, the most-traded SHFE zinc 2512 contract opened at 22,720 yuan/mt. It rose to 22,735 yuan/mt at the start before fluctuating downward, hitting a low of 22,530 yuan/mt during the session, then rebounded slightly, finally closing down at 22,575 yuan/mt, a decrease of 145 yuan/mt or 0.64%. Trading volume decreased to 56,801 lots, and open interest fell by 157 lots to 112,000 lots.

Macro: The US Senate is expected to advance an agenda to end the government shutdown; Trump: Unknown how long the government shutdown will last; US November University of Michigan Consumer Sentiment fell to its lowest level since June 2022; US Treasury Secretary Besant: The economic impact of the government shutdown is getting worse; Trump: Hopes to continue meeting with Putin in Budapest, meeting with Putin is under discussion; NBS: October CPI turned to a 0.2% increase YoY, up 0.2% MoM; PPI fell 2.1% YoY; The Third China-Switzerland Ministerial-Level Financial Meeting was held in Bern, Switzerland; State Administration of Foreign Exchange: China's current account surplus in Q3 was 1,394.8 billion yuan, foreign direct investment in China maintained a net inflow; PBOC increased gold holdings for the 12th consecutive month.

Spot:

Shanghai: The refined zinc purchasing sentiment in Shanghai was 2.45, while the selling sentiment was 2.36. Last Friday, spot availability remained limited. Traders continued to raise their premiums over the average price, and spot premiums fluctuated at highs. However, spot transactions in the Shanghai market were primarily among traders. Downstream enterprises mostly purchased zinc ingots delivered from plant warehouses, with purchasing basically maintaining rigid demand.

Guangdong: The refined zinc purchasing sentiment in Guangdong was 2.04, while the selling sentiment was 2.48. Overall, zinc prices were relatively strong last Friday. However, as the weekend approached, there was some restocking activity downstream. Market turnover improved slightly compared to the previous day, driving spot premiums and discounts slightly higher on Friday.

Tianjin: The refined zinc purchasing sentiment in Tianjin was 1.83, while the selling sentiment was 2.51. Last Friday, zinc prices mainly fluctuated. Affected by environmental protection-driven production restrictions, downstream demand was weak. However, approaching the weekend, rigid demand restocking by downstream users increased. Trader offers were chaotic, the price spread between brands widened, and trading was mainly among traders. Overall market turnover was sluggish.

Ningbo: Yongchang zinc ingots arrived in Ningbo, but the supply supplement to the market was limited, and availability remained scarce. Some traders continued to hold prices firm, resulting in significant divergence in spot offers. However, futures maintained high levels. Downstream enterprises basically purchased as needed, and high-premium zinc ingots encountered poor sales.

Inventory: On November 7, LME zinc inventory increased by 800 mt to 34,900 mt, up 2.35%. According to SMM communication, as of November 6, the total zinc ingot inventory in seven SMM-tracked regions was 158,700 mt, down 2,700 mt from October 30 and 3,000 mt from November 3, indicating a decrease in domestic inventory.

Zinc Price Forecast: Last Friday, the LME zinc contract recorded a bullish candlestick, supported by the lower 20-day and 60-day daily averages. Due to uncertainty surrounding the US Fed's outlook and the ongoing US government shutdown, market sentiment remains cautious. However, with LME inventory increasing slightly, LME zinc maintained a fluctuating trend. Last Friday, SHFE zinc recorded a bearish candlestick, supported by the lower 10-day and 60-day daily averages. Driven by the open export window, recent domestic spot zinc exports have continued. Meanwhile, domestic zinc ore TCs continued to decline, indicating tight ore supply, which provides some support to the bottom of SHFE zinc. Future performance of domestic zinc ingot exports will be closely watched.

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.