US Government Reopens, LME Zinc Records a Bearish Candlestick [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,072.5/mt, with its center rising initially to touch a high of $3,100.5/mt. Upon entering European trading hours, bears increased their positions, causing LME zinc to fluctuate downward and probe a low of $3,038.5/mt. Although it rebounded slightly afterward, the momentum was limited, and it finally closed down at $3,040.5/mt, falling $31.5/mt, a decrease of 1.03%. Trading volume decreased to 121,000 lots, while open interest increased by 7,364 lots to 228,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened lower with a gap at 22,700 yuan/mt. It briefly surged higher at the opening to touch 22,725 yuan/mt, but then bulls reduced their positions, pushing the price to fluctuate downward and probe a low of 22,620 yuan/mt. It subsequently maintained a rangebound trend and finally closed down at 22,635 yuan/mt, falling 105 yuan/mt, a decrease of 0.46%. Trading volume dropped to 40,145 lots, while open interest decreased by 281 lots to 103,000 lots.

Macro: Trump signed a bill to end the longest government shutdown in US history; Director of the White House National Economic Council: The October employment report will be released soon but will not include the unemployment rate; US Fed hawks continue to signal caution; Trump plans to attend the Davos meeting in January next year; European financial stability officials discuss mechanisms to replace US Fed dollar liquidity support; Ministry of Commerce: China conducts export control work on rare earth-related items in accordance with laws and regulations.

Spot:

Shanghai: The refined zinc procurement sentiment in Shanghai was 2.16, while the sales sentiment was 2.19. Few traders were offering spot cargo in the market. Shanghai traders maintained high spot quotes yesterday, but zinc ingots from factory pick-up continued to flow into the downstream market. Downstream enterprises purchased low-priced factory pick-up cargo, while self pick-up from Shanghai warehouses mostly involved transactions among traders. Overall trading volume showed no improvement.

Guangdong: The refined zinc procurement sentiment in Guangdong was 1.99, while the sales sentiment was 2.32. Overall, market trading remained relatively mediocre yesterday. Downstream purchasing enthusiasm was low, mainly maintaining just-in-time procurement. Although some traders quoted higher premiums and discounts, trading was sluggish, and premiums and discounts edged down slightly amid weak market transactions.

Tianjin: The refined zinc procurement sentiment in Tianjin was 1.73, while the sales sentiment was 2.23. Zinc prices fluctuated mainly yesterday. Downstream activity was dominated by long-term contracts and just-in-time restocking. Few traders provided quotes, leading to chaotic market quotations. Prices held steady with minor fluctuations, and overall market trading was sluggish.

Ningbo: Almost no traders provided quotes in the Ningbo market yesterday. Futures maintained a fluctuating trend. Some downstream enterprises had built up certain inventory from previous purchases, resulting in low willingness to inquire or purchase yesterday. Overall market trading was sluggish.

Inventory: On November 13, LME zinc inventory increased by 1,925 mt to 37,800 mt, a rise of 5.37%. According to SMM communication, as of November 13, the total zinc ingot inventory in seven SMM regions was 157,900 mt, decreasing by 800 mt compared to November 6 and by 1,700 mt compared to November 10. Domestic inventory decreased.

Zinc Price Forecast: Overnight, LME zinc recorded a bearish candlestick, with support provided by the 40/60-day moving averages below. The US government ended its shutdown, and the US dollar index continued to decline. However, overseas inventories increased by nearly 2,000 mt, causing LME zinc to rise initially before falling. Overnight, SHFE zinc recorded a small bearish candlestick, with the middle Bollinger Band providing support below. Current downstream consumption remains mediocre, and demand-side support for SHFE zinc is weak. However, driven by the opening of the export window, domestic spot cargo is flowing overseas, providing some support to SHFE zinc. Zinc prices are expected to maintain a fluctuating trend in the short term.

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. They are for reference only and do not constitute decision-making advice.