Market Expectations for US Fed Interest Rate Cuts Strengthen, LME Zinc Hovers at Highs [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 25

Futures: Overnight, LME zinc opened at $2,987.5/mt, fluctuated upward after opening, touched a high of $3,015/mt, then pulled back all the way, approaching the low of $2,987.5/mt near the end of the session, before rising slightly to trade near the daily average line, finally closing up at $3,003/mt, up $11/mt, a gain of 0.37%, with trading volume decreasing to 6,251 lots and open interest decreasing by 1,637 lots to 217,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,335 yuan/mt, touched a low of 22,275 yuan/mt at the beginning of the session, then fluctuated rangebound around the daily average line, rose slightly above the daily average line during the session, touched a high of 22,365 yuan/mt near the end of the session, finally closing down at 22,320 yuan/mt, down 70 yuan/mt, a loss of 0.31%, with trading volume decreasing to 36,148 lots and open interest increasing by 3,740 lots to 100,000 lots.

Macro: Ukrainian official: The previous 28-point peace plan no longer exists; US Fed's Waller and Daly support an interest rate cut in December; EU refuses to ease digital regulation in exchange for steel and aluminum tariff reductions; China's refined oil product prices saw the tenth cut this year; The central bank will conduct 1,000 billion yuan in MLF operations today.

Spot Market:

Shanghai: Yesterday, the refined zinc purchasing sentiment in Shanghai was 2.43, and the selling sentiment was 2.46. At the beginning of the week, market traders mainly sold, the overall average price rose slightly and was basically stable MoM, although futures pulled back slightly, some downstream players held a wait-and-see sentiment, spot purchases were still made as needed yesterday, and spot trading performance was average.

Guangdong: Yesterday, the refined zinc purchasing sentiment in Guangdong was 2.23, and the sales sentiment was 2.49. Overall, zinc prices maintained a fluctuating trend, downstream players maintained a wait-and-see attitude, mainly making just-in-time procurement, some traders reported light actual trading, spot trades in the market failed to show significant improvement, and spot premiums/discounts held steady.

Tianjin: Yesterday, the refined zinc purchasing sentiment in Tianjin was 2.29, and the selling sentiment was 2.42. Zinc prices dropped back slightly yesterday, some downstream players placed orders at lower prices, but most enterprises still held a wait-and-see attitude, trader quotations were generally stable, and overall market trading was average.

Ningbo: Long-term contract zinc ingots continued to arrive, spot quotations in Ningbo were scarce yesterday, but as the price spread between Shanghai and Ningbo widened, zinc ingots from Shanghai might flow to the Ningbo market subsequently, some traders began to lower spot quotations, some downstream enterprises actively inquired and purchased due to shortages, and the performance of downstream enterprises continued to be polarized.

Social Inventory: On November 21, LME zinc inventory increased by 100 mt to 47,425 mt, up 0.21%; According to SMM communication, as of November 24, the total zinc ingot inventory in seven SMM regions was 151,000 mt, down 5,600 mt from November 17 and down 1,700 mt from November 20, indicating a decrease in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bullish candlestick, with resistance formed by the 10-day daily average moving average. Although LME zinc ingot inventory continued to rise recently, increased expectations for a US Fed interest rate cut next month and ongoing macro support kept zinc prices hovering at highs during the night session. Overnight, the SHFE zinc contract recorded a bearish candlestick, facing resistance from the 5-day daily average moving average. Zinc ingot consumption remained weak during the year-end off-season, but domestic mine TCs continued to decline, and SMM social zinc ingot inventory fell again on Monday, 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, for reference only and do not constitute decision-making advice.