LME zinc ingot inventory continues to accumulate, LME zinc declines from high levels [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 28

Futures: Overnight, LME zinc opened at $3,056.5/mt, initially touched a high of $3,060.5/mt, then basically maintained a fluctuating downward trend after opening, hitting a low of $3,011.5/mt near the close, and finally closed down at $3,033/mt, down $33/mt, a decrease of 1.08%, with trading volume decreasing to 8,392 lots and open interest increasing by 1,834 lots to 222,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,370 yuan/mt, initially touched a high of 22,370 yuan/mt, then briefly fell to a low of 22,300 yuan/mt, before rebounding above the daily average line, basically maintaining a rangebound fluctuation, and finally closed down at 22,335 yuan/mt, down 80 yuan/mt, a decrease of 0.36%, with trading volume decreasing to 47,071 lots and open interest decreasing by 175 lots to 102,000 lots.

Macro: Putin: No final version of peace agreement yet; US B-52H bomber conducts attack exercises in the Caribbean; OPEC+ may maintain production unchanged at Sunday meeting; State Council executive meeting: Deploys promotion of provincial-level coordination for basic medical insurance; Ministry of National Defense responds to "China building nuclear-powered aircraft carrier".

Spot Market:

Shanghai: Yesterday, the buying sentiment for refined zinc in Shanghai was 2.35, and the selling sentiment was 2.50. Shanghai zinc ingot inventory continued destocking, with limited zinc ingot supply in the market. However, as zinc futures prices rose compared to the previous day in the morning, downstream buyers' willingness to purchase weakened again due to high prices, leading to an overall weaker spot transaction, with trading still mainly among traders.

Guangdong: Yesterday, the buying sentiment for refined zinc in Guangdong was 2.17, and the selling sentiment was 2.43. Overall, with the price center rising yesterday, more traders in the market were selling, but downstream purchase willingness was low. Market transactions were mainly just-in-time procurement by enterprises, and traders' sales were relatively average.

Tianjin: Yesterday, the buying sentiment for refined zinc in Tianjin was 2.23, and the selling sentiment was 2.50. Zinc prices slightly rebounded yesterday, downstream demand was relatively average, with a wait-and-see attitude towards zinc prices, low procurement enthusiasm and few point transactions, while traders had a firm price mentality, keeping quotations stable, resulting in overall sluggish market transactions.

Ningbo: Honglu long-term contract zinc ingot arrivals were limited, spot supply in Ningbo market remained scarce yesterday, some traders quoted passively, spot premiums rose again, but futures prices also increased, downstream enterprises were reluctant to purchase due to high prices, overall market transactions were sluggish.

Social Inventory: On November 26, LME zinc inventory increased by 875 mt to 50,800 mt, up 1.75%; according to SMM communication, as of November 27, the total zinc ingot inventory in seven regions tracked by SMM was 148,100 mt, down 4,600 mt from November 20 and down 2,900 mt from November 24, indicating a decrease in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bearish candlestick, with support from the 5-day moving average. As market macro sentiment gradually digested and LME zinc ingot inventory continued to accumulate to over 50,000 mt, inventory support for zinc prices weakened, leading LME zinc to retreat from highs. Overnight, SHFE zinc recorded a bearish candlestick, pressured by the 10-day moving average. Pulled down by the decline in LME zinc, SHFE zinc opened lower with a gap during the night session. However, the zinc ingot export window remained open, and zinc concentrate TCs continued to decline, providing underlying support for SHFE zinc. In the short term, SHFE zinc is expected to maintain a fluctuating trend.

Data Source Statement: Data not from public information are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not as decision-making advice.