Dovish Remarks Boost Interest Rate Cut Expectations, LME Zinc Rebounds from Intraday Lows [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 24

Futures: Last Friday, LME zinc opened at $3,002.5/mt, touched a high of $3,013/mt early in the session, then fluctuated downward throughout the day, hitting a low of $2,954.5/mt. It later rebounded from the low to above the daily average line, closing down at $2,992/mt, a decrease of $11.5/mt or 0.38%. Trading volume increased to 12,605 lots, while open interest fell by 2,600 lots to 218,000 lots. Last Friday, the most-traded SHFE zinc 2601 contract opened at 22,390 yuan/mt, touched a high of 22,390 yuan/mt at opening, then fluctuated downward slightly to a low of 22,245 yuan/mt. It subsequently fluctuated rangebound around the daily average line, closing down at 22,350 yuan/mt, a decrease of 40 yuan/mt or 0.18%. Trading volume increased to 54,465 lots, while open interest rose by 4,345 lots to 96,223 lots.

Macro: US and Ukraine representatives stated that Geneva talks "made progress"; Europe reportedly submitted a counter-proposal addressing 28 articles; US Fed "third-in-command" Williams: still sees room for interest rate cuts in the near term; US Fed will have no CPI report updates before the December policy meeting; Trump administration prepares tariff backup plan in response to court ruling; US official stated the US will take new actions against Venezuela; Electronic savings bonds to be included in personal pension product range; China's satellite IoT business commercial trial officially launched; Ant Group's Lingguang App surpassed 1 million downloads within 4 days of launch; US government reportedly considering allowing Nvidia to sell H200 chips to China.

Spot Market:

Shanghai: Last Friday, the purchase willingness for refined zinc in the Shanghai area was 2.46, while the willingness to sell was 2.55. Futures fluctuated rangebound towards the weekend. Market shipments increased last Friday, and the average spot price continued to adjust downward. Some traders took the opportunity to purchase, while downstream buyers continued to purchase low-priced zinc ingots with factory delivery. Spot trades in the Shanghai market were primarily among traders.

Guangdong: Last Friday, the purchase willingness for refined zinc in the Guangdong area was 2.26, while the sales sentiment was 2.44. Overall, zinc prices' center moved higher last Friday. Downstream fear of high prices emerged, combined with prior stockpiling, leading to lower purchase enthusiasm. Meanwhile, traders had low willingness to sell at low prices, making shipments more difficult.

Tianjin: Last Friday, the purchase willingness for refined zinc in the Tianjin area was 2.26, while the willingness to sell was 2.40. Zinc prices slightly rebounded last Friday. Downstream consumption was relatively average, and most enterprises had already priced and picked up goods extensively at the beginning of the week, resulting in fewer downstream purchases. Trader quotations remained generally stable, and overall market trading was sluggish.

Ningbo: As it was the weekend, spot quotations in Ningbo were scarce last Friday. Tight spot supply showed no improvement. However, major plants mostly accepted previously pre-sold or long-term contract zinc ingots and showed low willingness to purchase high-priced spot cargo. Overall spot trades were sluggish.

Social Inventory: On November 20, LME zinc inventory increased by 1,250 mt to 47,325 mt, up 2.71%. According to SMM communication and understanding, as of November 20, the total zinc ingot inventory in seven regions tracked by SMM was 152,700 mt, down 5,200 mt from November 13 and 3,900 mt from November 17, indicating a decrease in domestic inventory.

Zinc Price Forecast: Last Friday, LME zinc recorded a bearish candlestick, with support from the 5-day moving average below. Recently, LME zinc ingot inventory has gradually accumulated, weakening inventory support for zinc prices. However, dovish remarks from US Fed officials boosted expectations for US Fed interest rate cuts, leading to a partial recovery in LME zinc's intraday decline. Last Friday, SHFE zinc recorded a bearish candlestick, with resistance from the 10-day moving average above. Affected by LME zinc, SHFE zinc fell during the night session. Nevertheless, zinc concentrate TCs continued to decline both domestically and internationally, raising expectations for production cuts at smelters. Additionally, zinc ingot exports in November are expected to continue growing, providing fundamental support for zinc prices. SHFE zinc maintained a fluctuating trend during the night session.

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.