US September Retail Sales MoM Falls Short of Expectations LME Zinc Maintains High Level [SMM Zinc Morning Meeting Minutes]

November 26 Zinc Morning Meeting Summary

Futures: Overnight, LME zinc opened at $3,002/mt. After the opening, LME zinc fluctuated along the daily moving average. During the session, LME zinc quickly rose, reaching a high of $3,020/mt before retreating again. LME zinc touched a low of $2,983.5/mt and then rebounded to near the daily moving average, closing down at $2,999.5/mt, a decrease of $3.5/mt, or 0.12%. Trading volume increased to 9,349 lots, and open interest rose by 2,377 lots to 219,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,340 yuan/mt. At the beginning of the session, SHFE zinc briefly fluctuated upward, reaching a high of 22,425 yuan/mt, then retreated from highs, falling to a low of 22,285 yuan/mt. Subsequently, SHFE zinc slowly recovered from the low, closing down at 22,330 yuan/mt, a decrease of 30 yuan/mt, or 0.13%. Trading volume decreased to 47,867 lots, and open interest increased by 3,549 lots to 103,000 lots.

Macro: Ukraine is said to have agreed in principle to the US-proposed peace agreement; Trump is likely to announce the new chairman before Christmas; US September retail sales MoM were below expectations; Ministry of Foreign Affairs: The Sino-US presidential call was initiated by the US; Huawei Mate 80-series and Huawei Mate X7 released.

Spot Market:

Shanghai: Yesterday, the procurement sentiment for refined zinc in the Shanghai area was 2.41, and the selling sentiment was 2.42. Market shipments were not abundant, and traders continued to hold prices firm, with spot premiums rising. Futures maintained a fluctuating trend, but downstream wait-and-see sentiment was strong. Additionally, some low-priced factory goods continued to flow into the east China downstream market, and trading in the Shanghai market was still mainly between traders.

Guangdong: Yesterday, the procurement sentiment for refined zinc in the Guangdong area was 2.25, and the selling sentiment was 2.47. Overall, current downstream consumption was relatively mediocre, with enterprises mostly making just-in-time procurement. However, the price spread between futures contracts has gradually narrowed recently, and given the large Shanghai-Guangdong price spread, spot premiums and discounts in Guangdong rose yesterday.

Tianjin: Yesterday, the procurement sentiment for refined zinc in the Tianjin area was 2.27, and the selling sentiment was 2.45. Zinc prices mainly fluctuated, and downstream players still had a bearish outlook, maintaining a wait-and-see attitude, with fewer orders for cargo pick-up. Traders' shipments were relatively stable, and overall market transactions were mediocre.

Ningbo: Some Jijin and Wanyang zinc ingots flowed into the downstream market, and some downstream players had already built up inventory from previous purchases. Yesterday, downstream enterprises inquired and picked up goods less than the day before, and spot premiums decreased MoM, with overall spot transactions turning worse MoM.

Social Inventory: On November 24, LME zinc inventory increased by 575 mt to 48,000 mt, an increase of 1.21%. According to SMM, as of November 24, the total zinc ingot inventory in seven locations was 151,000 mt, a decrease of 5,600 mt from November 17 and a decrease of 1,700 mt from November 20, indicating a reduction in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc recorded a bearish candlestick, with the 40-day daily average forming resistance overhead. The US Fed's September retail sales month-on-month figure fell below expectations, strengthening market expectations for an interest rate cut by the US Fed. The US dollar index pulled back, but LME zinc ingot inventory continued to accumulate, causing LME zinc to fluctuate at highs. Overnight, SHFE zinc recorded a bearish candlestick, with the 10-day daily average forming resistance overhead. Amid tight ore supply, there are expectations for smelters to cut production, providing some bottom support for zinc prices. However, domestic off-season consumption performance is weak, with mixed fundamental factors. In the short term, SHFE zinc is expected to maintain a fluctuating trend.

Data Source Statement: Data other than publicly available information 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.