Interest Rate Cut Expectations Intensify, Zinc Prices on SHFE and LME Fluctuate Considerably [SMM Market Review - Weekly Price Commentary]

       LME Zinc: At the beginning of the week, LME zinc continued the fluctuating trend from the previous week. However, increased divergence over a December interest rate cut by the US Fed and cooling expectations for a rate cut pushed the US dollar to rebound, putting LME zinc under pressure and driving it lower. Subsequently, weak US ADP and initial jobless claims data indicated a softening labor market, leading to a US dollar pullback and a slight rise in LME zinc. Although the weak data triggered risk-off sentiment providing some support, growing expectations that the US Fed would keep rates unchanged, coupled with an increase in overseas zinc inventory, kept LME zinc fluctuating continuously. Later, fund inflows drove LME zinc higher. However, recently released data showed a surprise significant increase in US non-farm payrolls for September, but the unemployment rate rose to a four-year high, complicating the interest rate cut decision, and LME zinc moved lower. As of 15:00 Friday, LME zinc was recorded at $2,989/mt, down $25.5/mt, a decrease of 0.85%.

       SHFE Zinc: At the beginning of the week, SHFE zinc continued its downward trend from the previous week. Subsequently, SMM data showed that as of Monday, domestic social inventory slightly decreased, supporting a slight rise in the SHFE zinc price center. However, due to recently cooled expectations for a US interest rate cut, the decline in LME prices also led SHFE zinc lower. But later, SHFE zinc opened higher with a gap driven by LME movements. Then, according to SMM data, as of Thursday, domestic social inventory across seven regions continued to decrease, coupled with expectations for future smelter production declines, providing support for prices. However, market demand performance was relatively mediocre during the consumption off-season, and SHFE zinc maintained a fluctuating trend. Subsequently, SHFE zinc opened higher with a gap again driven by LME movements, but end-use consumption provided insufficient support for prices, and SHFE zinc moved lower. As of 15:00 Friday, SHFE zinc was recorded at 22,395 yuan/mt, down 30 yuan/mt, a decrease of 0.13%.