Expectations for US Fed Interest Rate Cut Strengthen, Zinc Prices Fluctuate at Highs [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 4

Futures: Overnight, LME zinc opened at $3,064/mt. Initially, LME zinc fluctuated upward along the daily average line. During European trading hours, it touched a high of $3,093.5/mt, then fluctuated downward as bulls took profits and exited, with its center shifting down to consolidate near $3,060/mt. It finally closed up at $3,062/mt, up $6.5/mt, a gain of 0.21%. Trading volume increased to 15,774 lots, and open interest increased by 1,894 lots to 223,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened lower with a gap at 22,710 yuan/mt. After quickly probing a low of 22,650 yuan/mt initially, SHFE zinc rose rapidly as bears reduced positions and exited, operating overall above the daily average line. It finally closed up at 22,850 yuan/mt, up 110 yuan/mt, a gain of 0.48%. Trading volume decreased to 81,790 lots, and open interest decreased by 337 lots to 104,000 lots.

Macro: US ADP employment decreased by 32,000 in November, against market expectations of an increase of 10,000; the Trump administration is considering going "all out" to accelerate the development of the robotics industry next year; US media: US Treasury Secretary Besant may also serve as Director of the National Economic Council; Kremlin: It is incorrect to say that Russian President Putin rejected the US proposal on Ukraine.

Spot Market:

Shanghai: The refined zinc purchase sentiment in Shanghai was 2.3, and the sales sentiment was 2.47. With zinc futures prices fluctuating at highs, few traders sold in the Shanghai market yesterday. Spot premiums rose again, but downstream enterprises remained cautious of high prices and were not active in purchasing. Spot trades were mainly conducted among traders.

Guangdong: The refined zinc purchase sentiment in Guangdong was 2.02, and the sales sentiment was 2.50. Overall, the current zinc price center has moved higher and is fluctuating rangebound. Downstream stocking willingness is low, with procurement mainly for just-in-time needs. Market trades were sluggish, and spot premiums/discounts continued to decline.

Tianjin: The refined zinc purchase sentiment in Tianjin was 2.05, and the sales sentiment was 2.48. Zinc prices continued to fluctuate at highs yesterday. Downstream players still held a bearish view, with few inquiries for pricing. Traders mainly shipped warrants to delivery warehouses, with limited spot cargo sales. Quotations reflected a mentality to hold prices firm. Overall market transactions were poor.

Ningbo: As zinc ingot volumes were gradually digested, the number of selling traders in the Ningbo market decreased again. Spot premiums fluctuated at highs, and futures prices continued to rise. Some downstream players had previously purchased pre-sold zinc ingots and held certain raw material inventories, resulting in poor purchase willingness. Overall trading was relatively sluggish.

Social Inventory: On December 3, LME zinc inventory increased by 75 mt to 52,450 mt, up 0.14%. 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: LME zinc recorded a doji bearish candlestick overnight, with support provided by the middle Bollinger Band. LME zinc maintained a fluctuating trend overnight; unexpectedly weak US ADP data bolstered expectations for a US Fed interest rate cut next week, with bulls increasing positions as the main driver, causing LME zinc to fluctuate at highs. SHFE zinc recorded a five-day winning streak overnight, with the center of the daily candlestick shifting upward, while the upper Bollinger Band formed resistance. Overnight, macro and fundamental factors resonated, supporting zinc prices to hold up well, with spot premiums also rising steadily, driving SHFE zinc to hit a new high since August this year.

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.