Weak US Employment Data, LME Zinc Traded Volatile [SMM Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes for November 19
Futures: Overnight, LME zinc opened at $2,987/mt. At the beginning of the session, bulls reduced their positions, and LME zinc fluctuated downward, hitting a low of $2,961/mt during European trading hours. Subsequently, bears reduced their positions, and LME zinc fluctuated upward throughout the session, reaching a high of $3,012.5/mt before closing up at $2,990.5/mt, an increase of $1/mt or 0.03%. Trading volume increased to 14,603 lots, while open interest decreased by 3,020 lots to 221,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,325 yuan/mt, which was also the day's lowest price. Subsequently, bulls increased their positions, and SHFE zinc rose rapidly to a high of 22,480 yuan/mt. However, due to insufficient upward momentum, SHFE zinc then fluctuated downward, ultimately closing up at 22,385 yuan/mt, an increase of 55 yuan/mt or 0.25%. Trading volume decreased to 37,710 lots, while open interest increased by 3,131 lots to 85,504 lots.
Macro:
Trump hinted that the Fed Chairman candidate has been finalized; the release time for a new batch of US data was finalized; the Governor of the Bank of Japan indicated that the interest rate hike path remains unchanged; China expressed dissatisfaction with the results of the China-Japan consultations; the Ministry of Commerce responded to media inquiries regarding the US amendment of rules related to patent invalidation applications.
Shanghai: Yesterday, the refined zinc procurement sentiment in Shanghai was 2.56, while the sales sentiment was 2.40. Tight supply in the Shanghai market showed no improvement, and market traders continued to hold prices firm, leading to a continued rise in spot premiums. Meanwhile, futures prices continued to decline MoM, prompting downstream enterprises to show high interest in point pricing. However, most point pricing was for zinc ingots previously contracted, and spot procurement by downstream enterprises remained driven by rigid demand yesterday.
Guangdong: Yesterday, the refined zinc procurement sentiment in Guangdong was 2.36, while the sales sentiment was 2.35. Overall, contract rollover occurred in Guangdong yesterday. The continuous decline in zinc prices led some traders to quote higher premiums and discounts, making transactions difficult. On the demand side, although some downstream enterprises exhibited strong wait-and-see sentiment due to concerns about further price declines, there were also downstream enterprises conducting moderate restocking at low prices, leading to a slight improvement in overall transactions.
Tianjin: Yesterday, the refined zinc procurement sentiment in Tianjin was 2.42, while the sales sentiment was 2.41. Zinc prices continued to pull back yesterday. Downstream enterprises engaged in point pricing and restocking at low prices, while traders, with a firm price mentality, continued to raise their offers, resulting in a slight increase in premiums. Overall market transactions improved compared to the previous day.
Ningbo: Spot zinc ingot inventory gradually depleted. Yesterday, there were almost no spot quotes in Ningbo, as traders continued to pre-sell subsequent arrivals of zinc ingots. Spot premiums continued to rise, while futures prices declined significantly. Downstream enterprises showed high interest in point pricing, but spot trades in the market were sluggish yesterday.
Social Inventory: On November 18, LME zinc inventory increased by 3,550 mt, or 8.8%, to 43,525 mt. According to SMM communication, as of this Monday (November 17), the total zinc ingot inventory in seven regions tracked by SMM was 156,600 mt, a decrease of 1,300 mt from November 13, indicating a reduction in domestic inventory.
Zinc Price Forecast: Overnight, the LME zinc contract recorded a long upper shadow bearish candlestick, dragged down by weak US employment data. The US dollar weakened, but expectations for a US Fed interest rate cut remained subdued. Additionally, small, sporadic shipments to LME delivery warehouses alleviated concerns over low inventory, leading to range-bound movement in LME zinc. It is expected that LME zinc will trade mainly within a range today. Overnight, the SHFE zinc contract recorded a long upper shadow bullish candlestick with no lower shadow. Macro sentiment remained weak, but expectations of reduced zinc supply in November provided bottom support for SHFE zinc, lifting its price center. It is expected that SHFE zinc will trade mainly within a range today.
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.