PMI Data Falls Short of Expectations, LME Zinc Fluctuates at Highs [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 2

Futures: Overnight, LME zinc opened at $3,058/mt. At the beginning of the session, LME zinc consolidated around the daily average line. Approaching the night session, bears reduced positions and exited the market, driving LME zinc to rise all the way, touching a high of $3,098.5/mt. The price center shifted upward to around $3,085/mt, where it fluctuated, eventually closing up at $3,091/mt, an increase of $40/mt, a gain of 1.13%. Trading volume increased to 14,668 lots, while open interest decreased by 1,636 lots to 218,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 22,650 yuan/mt. During the session, SHFE zinc fluctuated around the daily average line, with an amplitude not exceeding 200 yuan/mt, eventually closing up at 22,740 yuan/mt, an increase of 220 yuan/mt, a gain of 0.98%. Trading volume decreased to 64,076 lots, while open interest increased by 694 lots to 106,000 lots.

Macro: The US November ISM Manufacturing PMI fell short of market expectations, marking the ninth consecutive month in contraction territory; The White House: Trump will hold a meeting with the national security team on Venezuela; The US and UK reached a preliminary agreement on drug pricing; US tariffs on South Korean cars were reduced to 15% starting November 1; The UK Office for Budget Responsibility admitted errors led to the early leak of the budget report, and the head of the agency resigned; French President Macron will pay a state visit to China from December 3 to 5.

Spot Market:

Shanghai: The refined zinc purchasing sentiment in Shanghai was 2.36, and the selling sentiment was 2.53. Spot cargo availability in the Shanghai market was limited. Yesterday, traders continued to hold prices firm, and spot premiums continued to rise. However, zinc futures prices increased significantly in the morning session, leading downstream enterprises to reduce inquiries due to high prices. Purchases were mostly for rigid demand, with overall trading mainly among traders.

Guangdong: The refined zinc purchasing sentiment in Guangdong was 2.07, and the selling sentiment was 2.44. Overall, the price spread between futures contracts was basically flat WoW, but the zinc price center rose. Downstream buyers were cautious due to high prices, making it difficult for traders to sell, and spot premiums and discounts edged lower.

Tianjin: The refined zinc purchasing sentiment in Tianjin was 2.21, and the selling sentiment was 2.51. Yesterday, zinc prices rose, and downstream buyers were cautious due to high prices, with some restocking mainly for rigid demand. Some large enterprises waited for long-term contract deliveries. Zinc ingot availability in the Tianjin market was limited, and traders showed a tendency to hold prices firm in their quotes. Overall market transactions were poor.

Ningbo: Over the weekend, zinc ingot arrivals in the Ningbo market increased. Yesterday, more traders in Ningbo offered spot cargo, and there were some discrepancies in overall market quotes. Downstream enterprises preferred to purchase low-priced delivered zinc ingots. However, as futures prices rose in the morning, most spot transactions were for later pricing, and overall trading remained driven by rigid demand.

Social Inventory: On December 1, LME zinc inventory increased by 275 mt to 52,025 mt, up 0.53%. According to SMM communication, as of December 1, the total zinc ingot inventory in seven SMM regions was 144,300 mt, down 6,800 mt from November 24 and down 3,800 mt from November 27, indicating a decrease in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bullish candlestick, with the center of the daily candlestick shifting upward and various moving averages providing support below. The US November ISM Manufacturing PMI fell short of expectations, leading to a decline in the US dollar index, a broad rally in nonferrous metals, and the LME Cash-3M backwardation structure remaining elevated, causing LME zinc to fluctuate at highs. Overnight, SHFE zinc recorded a three-day winning streak, with the KDJ indicator expanding upward. Amid overnight supply reductions, social inventory declined again, coupled with copper and silver prices hitting new highs, pushing the zinc price center upward.

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