As expected, interest rate cuts combined with inventory increases led to a slight decline in the center of LME zinc [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,089.5/mt, initially rose to a high of $3,111/mt, then encountered resistance, pulled back, and maintained a fluctuating downward trend. Entering the night session, it probed a low of $3,072.5/mt, and finally closed down at $3,075/mt, down $14.5/mt, a decrease of 0.45%. Trading volume decreased to 91,626 lots, and open interest decreased by 217 lots to 222,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 23,050 yuan/mt, initially touched a high of 23,065 yuan/mt, then continuously moved downward, probing a low of 22,920 yuan/mt. Subsequently, bears reduced positions, and SHFE zinc fluctuated upward above the daily average line, finally closing at 23,005 yuan/mt, down 70 yuan/mt, a decrease of 0.30%. Trading volume decreased to 40,384 lots, and open interest decreased by 1,654 lots to 91,525 lots.

Macro: US Fed: Cut interest rates by 25 basis points, will purchase $40 billion in short-term bonds within the next 30 days; Trump criticized Powell: The rate cut was too small, could be doubled, should be reduced to the global lowest; Trump: The US seized a Venezuelan oil tanker near Venezuela, the action was legal; Bank of Canada held rates steady as expected; US Q3 labor cost growth slowed to a four-year low; Meta reportedly fully shifts to closed-source models; China's Ministry of Finance issued 750 billion yuan in special treasury bonds for "borrow new to repay old debt," not increasing the fiscal deficit; SHFE adjusted the trading margin ratios and price limit ranges for related silver futures contracts.

Spot:

Shanghai: Yesterday, the refined zinc purchasing sentiment in the Shanghai region was 2.24, and the selling sentiment was 2.54. Recently, silver-brand zinc ingots arrived in Shanghai, market traders continued to slightly lower spot premiums, but zinc futures prices remained high. Downstream users maintained a wait-and-see stance, spot purchases remained for rigid demand only. Overall trading in the Shanghai market was still primarily among traders.

Guangdong: Yesterday, the refined zinc purchasing sentiment in the Guangdong region was 1.93, and the selling sentiment was 2.39. Overall, zinc prices maintained a fluctuating trend yesterday. Although many traders were selling, downstream purchasing enthusiasm was insufficient, market wait-and-see sentiment was relatively strong, and spot transaction performance was poor. However, the price spread between futures contracts narrowed somewhat yesterday, and spot premiums and discounts edged up slightly.

Tianjin: Yesterday, the refined zinc purchasing sentiment in the Tianjin region was 1.84, and the selling sentiment was 2.51. Zinc prices edged down slightly yesterday. Downstream users restocked a small amount for rigid demand, while traders had a mentality to hold prices firm. Trading was mainly among traders. Overall market transactions improved slightly compared to the previous day.

Ningbo: Yesterday, zinc ingot spot availability in the Ningbo market was limited, overall premium quotes held steady. However, demand from downstream enterprises was sluggish, coupled with some traders continuously pre-selling zinc ingots. Spot transactions in the Ningbo market performed sluggishly today.

Inventory: On December 10, LME zinc inventory increased by 1,650 mt to 59,800 mt, up 2.84%. According to SMM communication, as of this Monday (December 8), the total zinc ingot inventory in seven SMM-tracked regions 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: Early this morning Beijing time, the US Fed cut interest rates by 25 basis points, largely in line with market expectations. Meanwhile, overseas zinc inventories continued to increase, easing low inventory pressure, and the LME zinc price center edged down. Overnight, the LME zinc contract recorded a long upper shadow bearish candlestick, with support provided by the 20-day and 60-day daily averages below. Overnight, SHFE zinc recorded three consecutive bearish candlesticks, still supported by the 10-day and 60-day daily averages below. Currently, domestic consumption shows no clear bright spots, while supply is gradually tightening; supply-demand resonance has kept SHFE zinc maintaining 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, for reference only and not intended as decision-making advice.