Employment Data Exceeds Expectations, LME Zinc Records a Bearish Candlestick [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,127/mt. After briefly touching a high of $3,127/mt at the beginning of the session, it came under pressure and pulled back, then fluctuated downward throughout. During European trading hours, bulls increased positions, pushing LME zinc above the daily average line, but upward momentum was insufficient. By the end of the session, it moved lower and touched a low of $3,086/mt, finally closing down at $3,089/mt, down $41.5/mt, a decrease of 1.33%. Trading volume decreased to 123,000 lots, while open interest increased by 2,111 lots to 222,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened higher with a gap at 23,120 yuan/mt, reaching a high immediately after opening. Subsequently, bulls reduced positions, and SHFE zinc pulled back, touching a low of 22,970 yuan/mt by the end of the session. It finally closed down at 22,985 yuan/mt, down 85 yuan/mt, a decrease of 0.37%. Trading volume decreased to 60,379 lots, while open interest decreased by 5,536 lots to 95,718 lots.

Macro: Trump: May reduce tariffs on some overpriced goods; British media: Trump began the final round of interviews for US Fed Chairman candidates this week; British media: Trump "pressured" Zelenskyy to respond to the peace proposal within days; Zelenskyy for the first time expressed willingness to hold elections; Li Qiang met with heads of the World Bank, International Monetary Fund, and United Nations Conference on Trade and Development, respectively; Shenzhou-21 astronaut crew successfully completed their first extravehicular activity; Moore Threads: Is expected to release a new-generation GPU architecture.

Spot:

Shanghai: Yesterday, the refined zinc procurement sentiment in Shanghai was 2.26, while the sales sentiment was 2.52. Recently, the price spread among the three regions widened significantly, with some zinc ingots from Guangdong flowing to downstream markets in east China, supplementing zinc ingot supply. Zinc futures prices continued to fluctuate at highs, spot premiums in the Shanghai market were adjusted downward, downstream enterprises remained cautious of high prices, and overall trading remained moderate.

Guangdong: Yesterday, the refined zinc procurement sentiment in Guangdong was 1.95, while the sales sentiment was 2.37. Overall, current inventory in Guangdong continued to decline, traders showed some sentiment to hold prices firm, but zinc prices overall maintained high fluctuations. Under price pressure, enterprises continued to make just-in-time procurement, and spot trading in the market remained relatively moderate.

Tianjin: Yesterday, the refined zinc procurement sentiment in Tianjin was 1.80, while the sales sentiment was 2.53. Yesterday, zinc prices continued to rise, downstream buyers were cautious of high prices and purchased cautiously, inquiries were few, while traders' sales held relatively steady. Trading was mainly among traders, and overall market trading was poor.

Ningbo: Some zinc ingot long-term contracts arrived, spot traders in Ningbo still offered few quotes, spot premiums remained high. However, as year-end approaches, orders for some alloy plants weakened again, recent spot purchase demand declined. Coupled with zinc futures prices holding up well, spot trades in Ningbo overall performed sluggish yesterday.

Inventory: On December 9, LME zinc inventory increased by 400 mt to 58,150 mt, up 4.29%. According to SMM communication, as of this Monday (December 8), the total zinc ingot inventory in seven SMM-tracked locations was 136,000 mt, down 8,200 mt from December 1 and 4,300 mt from December 4, indicating a decrease in domestic inventory.

Zinc Price Forecast: LME zinc recorded a large bearish candlestick overnight, with support provided by the 10-day and 60-day daily averages below. US job openings rose to their highest level in five months in October. Although hiring remained sluggish, it alleviated concerns about a worsening labour market to some extent, driving the US dollar index higher and causing the center of LME zinc to pull back. SHFE zinc recorded a bearish candlestick overnight, with support provided by the 10-day and 20-day daily averages below. Currently, domestic inventory continues to decline, and there are expectations of a decrease in smelter production. However, recent spot market transactions have been relatively average, with demand being moderate. SHFE zinc is expected to maintain a fluctuating trend.

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, and are for reference only, not constituting decision-making advice.