LME Zinc Prices Rose First Then Fell, Expected to Maintain Fluctuating Trend in the Short Term [SMM Zinc Morning Meeting Minutes]

December 22 Zinc Morning Meeting Summary

Futures: Overnight, LME zinc opened at $3,083.5/mt, and after the opening, it fluctuated upward to reach a high of $3,101/mt. It then pulled back from the highs, with LME zinc hitting a low of $3,064/mt during the night session. Subsequently, LME zinc rebounded to near the daily average, closing flat at $3,078/mt. Trading volume decreased to 7,997 lots, while open interest increased by 1,627 lots to 229,000 lots. Overnight, the most-traded SHFE zinc 2602 contract opened at 23,030 yuan/mt. At the beginning of the session, SHFE zinc briefly rose to 23,065 yuan/mt, then the center dropped to 22,955 yuan/mt. It then fluctuated rangebound around the daily average, finally closing down at 23,025 yuan/mt, a decrease of 90 yuan/mt or 0.39%. Trading volume fell to 56,488 lots, and open interest increased by 3,183 lots to 93,795 lots.

Macro: US Fed Governor Milan: The necessity for a 50-basis-point interest rate cut has weakened; Trump is likely to appoint a new Fed Chairman in the first week of January next year; Ukraine-US negotiations concluded, Zelensky stated that key work on the "peace plan" draft is complete; US media: Russia has begun evacuating diplomatic family members from Venezuela; Multiple cities in Iran held missile drills; Japanese Finance Minister issued a strong warning about intervention; The draft law on childcare services was submitted for the first review at the 19th meeting of the 14th NPC Standing Committee; The central bank released a notice regarding the implementation of a one-time credit repair policy; Five major futures exchanges announced the reduction of delivery fees and related charges for 2026; SHFE adjusted the trading fees and trading limits for silver futures contracts.

Spot Market:

Shanghai: In the Shanghai area yesterday, the refined zinc purchase sentiment was 2.26, and the selling sentiment was 2.56. The zinc price on the futures market maintained a fluctuating trend. Yesterday, traders in the Shanghai market were mainly selling, but downstream orders were poor at the end of the year, leading to low purchase willingness. Spot trades were slightly sluggish, and spot premiums remained stable.

Guangdong: In the Guangdong area yesterday, the refined zinc purchase sentiment was 2.04, and the sales sentiment was 2.6. Overall, the zinc price maintained a fluctuating trend. Downstream purchasing enthusiasm was insufficient, mostly purchasing as needed. There were more trades between traders. Additionally, continuous destocking in Guangdong recently provided some support for the rise in premiums and discounts.

Tianjin: In the Tianjin area yesterday, the refined zinc purchase sentiment was 1.91, and the selling sentiment was 2.52. The zinc price center slightly lifted. Although environmental protection restrictions in the north were lifted, downstream enterprises had previously fixed prices, and they mostly adopted a wait-and-see attitude yesterday. Traders' selling premiums were slightly stable, and overall market transactions were sluggish.

Ningbo: Some long-term contract zinc ingots arrived at the beginning of the week, but the market's spot supply was still limited. Some downstream enterprises actively inquired about prices due to shortages. Overall, spot trades in Ningbo were moderate, and spot premiums fluctuated at highs.

Social Inventory: On December 19, LME zinc inventory decreased by 650 mt to 99,250 mt, a drop of 0.65%. According to SMM communication, as of December 22, the total SMM zinc ingot inventory across seven regions was 124,500 mt, down 1,200 mt from December 15 but up 2,300 mt from December 18, indicating an increase in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bearish candlestick, with support from the lower Bollinger Band. The US dollar index retreated from highs, but LME zinc ingot inventory remained high, and the LME zinc 0-3 Contango structure persisted. LME zinc initially rose then fell overall, and is expected to maintain a fluctuating trend in the short term. Overnight, SHFE zinc recorded a bearish candlestick, pressured above by the 5-day daily average. Downstream consumption performance was poor towards the end of the year, and the zinc ingot export window remained closed. On Monday, SMM zinc ingot social inventory showed a slight increase. During the night session, the SHFE zinc price center pulled back slightly, but support from the supply side remains, limiting the downside room for SHFE zinc.

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.