Expectations for US Fed interest rate cut continue to boost, LME zinc rises all the way [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 27

Futures: Overnight, LME zinc opened at $3,000.5/mt, initially dipped to $2,998/mt, then rose throughout the session, reaching a high of $3,058.5/mt near the close, and finally settled up at $3,055/mt, up $55.5/mt, a gain of 1.85%, with trading volume increasing to 13,189 lots and open interest rising by 1,623 lots to 221,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,480 yuan/mt, fluctuated rangebound around the daily average after opening, touched a low of 22,450 yuan/mt early in the session, reached a high of 22,530 yuan/mt near the close, and finally settled up at 22,525 yuan/mt, up 170 yuan/mt, a gain of 0.76%, with trading volume increasing to 56,452 lots and open interest rising by 750 lots to 101,000 lots.

Macro: Russia stated it is too early to say a Ukraine peace agreement is expected to be reached; US initial jobless claims unexpectedly fell to the lowest level since April; the UK budget report was unexpectedly leaked early, with fiscal buffer space increased to 22 billion pounds; Beijing launched a special campaign focusing on rectifying six types of financial sector online misconduct; MIIT organized commercial trials for satellite IoT services.

Spot Market:

Shanghai: Yesterday, the refined zinc purchasing sentiment in Shanghai was 2.4, and the selling sentiment was 2.48. More traders were selling in the market, with the average price premium basically flat compared to the previous day. Futures maintained a fluctuating trend, downstream enterprises remained reluctant to purchase, spot procurement stayed need-based, and overall spot trades showed mediocre performance.

Guangdong: Yesterday, the refined zinc purchasing sentiment in Guangdong was 2.21, and the selling sentiment was 2.38. Overall, zinc prices have maintained a fluctuating trend recently with relatively small fluctuations. Downstream enterprises that had already stockpiled earlier showed low purchasing enthusiasm, overall market trading was relatively sluggish, and spot premiums/discounts remained unchanged.

Tianjin: Yesterday, the refined zinc purchasing sentiment in Tianjin was 2.21, and the selling sentiment was 2.48. Zinc prices mainly fluctuated rangebound yesterday, downstream enterprises adopted a wait-and-see attitude, procurement was primarily need-based restocking, with little spot pricing and cargo pick-up, while traders held prices firm, keeping offers steady, and overall market trading was sluggish.

Ningbo: Traders continued pre-selling subsequent zinc ingots, yesterday there were almost no spot offers in the Ningbo market, downstream enterprise orders were average, spot procurement remained need-based, and overall spot trading performance was sluggish.

Social Inventory: On November 25, LME zinc inventory increased by 1,925 mt to 49,925 mt, a rise of 4.01%; 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 large bullish candlestick, supported by the 60-day daily average below. Expectations for a US Fed interest rate cut next month strengthened, and the US dollar index continued to decline, with macro sentiment providing sustained support, driving LME zinc prices higher. Overnight, SHFE zinc recorded a bullish candlestick, supported by the 20-day daily average below. Boosted by the LME zinc performance, SHFE zinc opened higher with a gap in the night session. On the fundamentals side, ore supply tightness continues to provide support, but consumption is currently in the off-season. In a tug-of-war between longs and shorts, SHFE zinc is expected to hover at highs. Continued attention should be paid to subsequent smelter production cuts.

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.