September PCE Data Falls Short of Expectations, LME Zinc Center Edges Up [SMM Morning Meeting Minutes]

Futures: Last Friday, LME zinc opened at $3,086/mt, and after opening, prices rose rapidly, hitting an intraday high of $3,125/mt. Subsequently, bears increased their positions, causing LME zinc to pull back and test a low of $3,075.5/mt. It maintained a fluctuating trend towards the end of the session, eventually closing at $3,098.5/mt, up $13.5/mt, a gain of 0.44%. Trading volume fell to 110,000 lots, while open interest increased by 503 lots to 222,000 lots. Last Friday, the most-traded SHFE zinc 2601 contract opened at 23,190 yuan/mt. At the beginning of the session, SHFE zinc quickly moved lower, testing a low of 22,965 yuan/mt. Subsequently, bulls covered their positions, pushing SHFE zinc to fluctuate upward above the daily average line. It maintained rangebound fluctuations towards the end of the session, eventually closing at 23,065 yuan/mt, down 240 yuan/mt, a loss of 1.03%. Trading volume decreased to 82,861 lots, while open interest fell by 2,163 lots to 105,000 lots.

Macro: Besant: The US will achieve 3% GDP growth by the end of this year; Hamas says it is willing to discuss disarmament under a framework that promotes the establishment of a Palestinian state; The US core PCE price index annual rate unexpectedly pulled back in September; Hassett, Director of the White House Economic Council: Did not discuss the US Fed Chairman candidate with Trump; He Lifeng held a video call with US Treasury Secretary Besant and Trade Representative Greer; The PBOC increased its gold holdings for the 13th consecutive month.

Spot:

Shanghai: Last Friday, the refined zinc purchasing sentiment in the Shanghai area was 2.24, while the selling sentiment was 2.55. As zinc futures prices broke above 23,000 yuan/mt, more traders in the market were willing to sell, but the sentiment to hold prices firm persisted. The extent of the spot premium against the average price pulled back relatively limitedly, with the overall premium remaining high. Downstream enterprises' fear of high prices intensified, and spot purchasing remained just-in-time procurement.

Guangdong: Last Friday, the refined zinc purchasing sentiment in the Guangdong area was 1.97, while the sales sentiment was 2.40. Overall, as zinc prices continued to rise and the Shanghai-Guangdong price spread widened, traders' sales were poor. However, some traders had low willingness to sell at a discount. Downstream enterprises maintained just-in-time procurement, spot transactions were average, and premiums and discounts continued to decline.

Tianjin: Last Friday, the refined zinc purchasing sentiment in the Tianjin area was 1.83, while the selling sentiment was 2.53. Last Friday, zinc prices continued to rise. Downstream purchasing enthusiasm was low, with caution due to high prices. Traders' selling held steady slightly, with trading mainly among traders. Overall market transactions were poor.

Ningbo: Qilin zinc ingots arrived in the Ningbo market, but most of the volume had been pre-sold earlier. Last Friday, spot availability in Ningbo was limited. Traders continued to raise spot offers. Some downstream users with shortages made purchases as needed and fixed prices subsequently. Overall spot transaction performance was average.

Inventory: On December 5, LME zinc inventory increased by 1,050 mt to mt, a gain of 5.37%. According to SMM communication, as of last Thursday (December 4), the total zinc ingot inventory in seven SMM-tracked locations was 140,300 mt, down 7,700 mt from November 27 and down 4,000 mt from December 1, indicating a decrease in domestic inventory.

Zinc Price Forecast: Last Friday, the LME zinc recorded a long upper shadow bullish candlestick, with support provided by the 10-day and 60-day daily average lines below. The US September core PCE year-on-year rate unexpectedly pulled back to 2.8%, hitting a three-month low, the US dollar index declined, and the LME zinc center edged up slightly. Last Friday, SHFE zinc recorded a bald bearish candlestick, with support from various moving averages below. Domestic ore TCs continued to decline, and supply gradually tightened; however, end-use demand showed mediocre performance, and SHFE zinc maintained a fluctuating trend. Attention should be paid to domestic inventory performance.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.