LME Zinc Inventory Continues to Accumulate, LME Zinc Expected to Fluctuate in the Short Term [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 22

Futures: Last Friday, LME zinc opened at $3,063.5/mt. After opening, it fluctuated considerably around the daily average, hitting a low of $3,057/mt. During the night session, LME zinc fluctuated upward, reaching a high of $3,084/mt before pulling back near the daily average, finally closing up at $3,078/mt, up $20/mt, a gain of 0.65%. Trading volume decreased to 8,494 lots, and open interest increased by 449 lots to 227,000 lots. Last Friday, the most-traded SHFE zinc 2602 contract opened at 23,075 yuan/mt. After opening, it briefly rose to a high of 23,150 yuan/mt, then pulled back below the daily average to a low of 22,980 yuan/mt. Subsequently, after briefly trading at low levels, it recovered and fluctuated near the daily average, finally closing up at 23,090 yuan/mt, up 15 yuan/mt, a gain of 0.07%. Trading volume increased to 57,849 lots, and open interest increased by 1,800 lots to 88,165 lots.

Macro: US Fed "Third-in-Command": Low CPI Data Due to Technical Factors, No Rush to Adjust Monetary Policy; Informed Sources: Trump Has Interviewed Waller, Governor Bowman No Longer a Candidate for Fed Chairman; Both Ukraine and US Say New Round of Peace Plan Consultations Made Constructive Progress; Israeli Officials Plan to Brief Trump on Potential New Strikes Against Iran; Japanese LDP Official Says Necessary to Discuss Positioning of "Three Non-Nuclear Principles"; Cyberspace Administration of China and China Securities Regulatory Commission Deepen Crackdown on False Online Information Related to Capital Markets; Chongqing Issues China's First Official License Plates for L3 Autonomous Driving; Shenzhen Shuibei Removes "Investment Gold" from Shelves; Moore Threads Releases New Generation GPU Architecture "Huagang," Supporting AI Computing Clusters of Over 100,000 Cards.

Spot Market:

Shanghai: Last Friday, the refined zinc purchase sentiment in Shanghai was 2.32, and the sales sentiment was 2.6. Last Friday, more traders sold in the Shanghai market, premiums/discounts to the average price saw a pullback. Zinc futures maintained a fluctuating trend. Downstream enterprises had mostly completed priced procurement earlier, spot purchases remained just-in-time procurement, mostly purchasing low-priced factory-delivered goods. Overall market trading performance was average.

Guangdong: Last Friday, the refined zinc purchase sentiment in Guangdong was 2.03, and the sales sentiment was 2.45. Overall, recent inventory in Guangdong continued to decline, spot circulation of some brands decreased, coupled with downstream still making just-in-time procurement, driving spot premiums/discounts upward.

Tianjin: Last Friday, the refined zinc purchase sentiment in Tianjin was 1.93, and the sales sentiment was 2.58. Last Friday, zinc prices mainly fluctuated. Due to continued weakening environmental protection demand in the north, downstream priced cargo pick-up was limited, while traders slightly lowered premiums to sell goods. Overall market trading was sluggish.

Ningbo: Last Friday, the futures maintained a fluctuating trend. Market traders had limited sales, overall spot premiums remained high and stable, downstream enterprises made purchases based on demand, and overall spot transaction volumes showed no improvement.

Social Inventory: On December 18, LME zinc inventory increased by 500 mt to 99,900 mt, a rise of 0.5%. According to SMM communications, as of December 18, the total zinc ingot inventory across seven regions tracked by SMM was 122,200 mt, decreasing by 6,100 mt compared to December 11 and by 3,500 mt compared to December 15, indicating a reduction in domestic inventory.

Zinc Price Forecast: On the macro front, Japan's interest rate hike has been implemented, but the market had already priced in expectations earlier. Coupled with the continuous accumulation of LME inventory to nearly 100,000 mt and LME zinc 0-3 maintaining a contango structure, LME zinc is expected to fluctuate in the short term. SHFE zinc recorded a bullish candlestick, with support from the 5-day daily average line below. Although the recent decline in domestic ore TCs has temporarily halted, the smelting sector remains in a state of certain losses. The reduction in domestic refined zinc production continues, providing a bottom support for zinc prices. 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, for reference only and do not constitute decision-making advice.