LME Zinc Inventory Buildup Continues, LME Zinc Center Shifts Downward [SMM Morning Meeting Minutes]

SMM December 16 News:
Futures: Overnight, LME zinc opened at $3,135.5/mt. At the beginning of the session, LME zinc briefly rose to a high of $3,165/mt. Subsequently, with increased short positions, LME zinc fluctuated downward, reaching a low of $3,087.5/mt at the end of the session, and finally closed down at $3,095/mt, a decrease of $44/mt or 1.40%. Trading volume fell to 15,151 lots, while open interest increased by 12,493 lots to 236,000 lots. Overnight, the most-traded SHFE zinc 2601 contract opened at 23,310 yuan/mt. At the start of the session, SHFE zinc briefly rose to a high of 23,345 yuan/mt, then oscillated around the daily moving average, and finally closed down at 23,215 yuan/mt, a decrease of 215 yuan/mt or 0.92%. Trading volume fell to 66,013 lots, while open interest decreased by 1,147 lots to 82,155 lots.
Macro:
The competition for Fed Chairman candidates intensifies, with Kudlow facing opposition from Trump's inner circle; The US delegation insists that Ukraine cede the Donbass region, with Ukraine set to receive NATO-like Article 5 security guarantees; US media: The White House privately rebukes Netanyahu for violating the ceasefire agreement; Nasdaq will formally apply for 5x23-hour trading; Japanese media: The Bank of Japan is expected to raise interest rates to 0.75%; In November, China's total retail sales grew 1.3% YoY; State Administration of Foreign Exchange: Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
Shanghai: Yesterday, the purchasing sentiment for refined zinc in the Shanghai area was 2.29, and the selling sentiment was 2.56. At the beginning of the week, zinc prices retreated from the highs seen on Friday, but downstream enterprises mostly continued to expect further declines. Spot pricing was limited yesterday, and overall spot purchases remained just-in-time procurement. Traders' spot quotes were also firm, with overall spot premiums and discounts holding steady MoM. Some traders continued to pull zinc ingots from Guangdong to east China, and it is expected that the supply in the Shanghai market will be supplemented to some extent.
Guangdong: Yesterday, the purchasing sentiment for refined zinc in the Guangdong area was 1.95, and the selling sentiment was 2.39. Overall, the center of zinc prices declined somewhat, but downstream enterprises were mostly observing, still focusing on just-in-time procurement. Meanwhile, destocking continued in Guangdong, with some traders quoting higher premiums and discounts, leading to relatively moderate transactions. However, as premiums and discounts were adjusted downward, transactions improved slightly.
Tianjin: Yesterday, the purchasing sentiment for refined zinc in the Tianjin area was 1.82, and the selling sentiment was 2.52. Zinc prices fell somewhat, but did not reach the psychological price level of downstream buyers, who mainly observed. Traders' quotes remained stable, with transactions mainly occurring between traders, and overall market activity was moderate.
Ningbo: At the beginning of the week, long-term contracts for Yongchang and Honglu-v zinc ingots arrived. Yesterday, more traders in the Ningbo market offered to sell. Although futures prices pulled back WoW, downstream enterprises mostly continued to expect further declines, and overall spot transactions remained moderate, with spot premiums and discounts remaining stable.
Social Inventory: On December 15, LME zinc inventory increased by 2,550 mt, or 4.12%, to 64,475 mt. According to SMM communication, as of this Monday (December 15), the total SMM zinc ingot inventory across seven regions was 125,700 mt, down 10,400 mt from December 8 and 2,500 mt from December 11, indicating a decrease in domestic inventory.
Zinc Price Forecast: Overnight, LME zinc recorded a large bearish candlestick. LME inventory entered a phase of inventory buildup, easing market tension caused by low inventory. Korea Zinc continued to expand its smelter, and the center of LME zinc shifted downward. LME zinc was expected to trade mainly within a volatile range today. Overnight, SHFE zinc recorded a small bearish candlestick, with the 5-day daily average forming resistance and the 10-day daily average providing support. Macro optimism weakened. Fundamentally, the north entered another round of environmental protection alerts, and consumption weakened. Although supply-side support remained, the center of SHFE zinc shifted downward. SHFE zinc was expected to trade mainly within a volatile range today.
Data Source Statement: Except for publicly available information, other data were processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not as decision-making advice.

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