U.S. Government Shutdown Sees a Turnaround, LME Zinc Center Moves Higher [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,061.50/mt. After opening, prices climbed to a high of $3,105.00/mt, then fell below the daily average during the night session, touching a low of $3,061.50/mt. By the close, LME zinc recovered some losses and hovered near the daily average, ending up $19/mt at $3,085.50/mt, a gain of 0.62%. Trading volume increased to 107,000 lots, while open interest fell by 750 lots to 221,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened higher with a gap at 22,770 yuan/mt. Early in the session, short covering pushed prices up to 22,810 yuan/mt, before long liquidation drove prices below the daily average. A tug-of-war between longs and shorts then kept prices fluctuating around 22,715 yuan/mt, with a low of 22,695 yuan/mt. The contract ended up 50 yuan/mt at 22,720 yuan/mt, a gain of 0.22%. Trading volume decreased to 44,694 lots, while open interest fell by 1,784 lots to 109,000 lots.

Macro: US House Speaker Johnson expects the House to reconvene early this week; Senate Republican leader Thune said he would ensure a government shutdown-related agreement passes the Senate this morning; Switzerland is close to reaching a trade deal with the US; Buffett's farewell letter: he will keep a low profile and accelerate estate donations after stepping down at year-end, expressing support for successor Abel; the General Office of the State Council issued Several Measures to Further Promote Private Investment; the National Development and Reform Commission (NDRC) and the National Energy Administration issued guidelines to promote new energy consumption and regulation.

Spot:

Shanghai: Purchase willingness for refined zinc in Shanghai was 2.4, while sales willingness was 2.38. Against the backdrop of production cuts at some smelters, zinc ingot arrivals in the Shanghai market were somewhat affected, and traders showed a strong tendency to hold prices firm. Yesterday, the average spot price in Shanghai continued to rise, with spot premiums climbing. However, as zinc futures fluctuated at highs, downstream enterprises remained cautious of high prices, showing low purchase willingness for high-priced zinc ingots in Shanghai. Overall trading was mostly among traders.

Guangdong: Purchase willingness for refined zinc in Guangdong was 2.05, while sales willingness was 2.43. Overall, downstream purchase willingness was not high yesterday. Traders reported relatively moderate market transactions, though some brands quoted higher prices, maintaining some firmness. Among them, Qilin brand spot premiums saw relatively better sales. Yesterday, spot premiums and discounts rose slightly.

Tianjin: Purchase willingness for refined zinc in Tianjin was 1.82, while sales willingness was 2.34. Zinc prices mainly fluctuated yesterday. Environmental protection restrictions at downstream enterprises have mostly ended, but with zinc prices still high, downstream restocking was primarily for rigid demand. Few traders offered quotes, and overall market trading was sluggish.

Ningbo: Some traders continued to deliver pre-sold zinc ingots. Yesterday, few traders offered quotes in the Ningbo market, with spot premium quotes remaining high. Downstream enterprise orders were moderate, with purchases mostly based on demand. However, due to tight spot supply, overall trading performance was moderate.

Inventory: On November 10, LME zinc inventory remained unchanged at 34,900 mt; according to SMM communication, as of November 10, the total SMM zinc ingot inventory across seven regions was 159,600 mt, a decrease of 2,100 mt compared to November 3 and an increase of 900 mt compared to November 6, indicating a slight WoW increase in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bullish candlestick, supported by the 20-day and 60-day daily average moving averages below. Senate Republican Leader Thune stated that he would ensure the government shutdown-related agreement passes the Senate this morning, while US House Speaker Johnson expected the House to reconvene early this week. Signals of the US government resuming operations boosted market sentiment, lifting the LME zinc price center. Overnight, SHFE zinc recorded three consecutive bearish candlesticks, supported by various moving averages below. Driven by the LME, SHFE zinc opened higher with a gap. However, according to SMM data, as of November 10, the total SMM zinc ingot inventory across seven regions was 159,600 mt, a slight WoW increase of 900 mt compared to last Thursday. Coupled with mediocre domestic consumption performance, SHFE zinc lacked sufficient support to continue rising, with attention on subsequent domestic inventory performance.

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 not constituting decision-making advice.