U.S. Dollar Index Weakens, LME Zinc Center Shifts Upward [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 24

Futures: Overnight, LME zinc opened at $3,079.5/mt. It initially dipped to $3,068/mt, then fluctuated upward, reaching a high of $3,135/mt before pulling back below the daily average line. It finally closed up at $3,096.5/mt, gaining $18.5/mt, a rise of 0.6%. Trading volume increased to 10,885 lots, while open interest decreased by 1,391 lots to 228,000 lots. Overnight, the most-traded SHFE zinc 2602 contract opened at 23,290 yuan/mt. After opening, SHFE zinc fluctuated downward, reaching an intraday high of 23,315 yuan/mt early in the session. Approaching the close, it touched a low of 23,045 yuan/mt, finally settling up at 23,105 yuan/mt, gaining 15 yuan/mt, an increase of 0.06%. Trading volume increased to 108,000 lots, while open interest increased by 1,083 lots to 94,190 lots.

Macro: The US economy expanded at a 4.3% rate in Q3, the fastest pace in two years; Trump: Those who disagree with him will never become Fed Chairman; US Treasury Secretary suggests the US Fed could adjust its inflation target; Russian Foreign Ministry denies rumors about embassy withdrawal from Venezuela as untrue; Japan likely to assume long-term interest rates around 3% in its FY2026 budget; Japan experiences leak of water containing radioactive material; Premier Li Qiang: Accelerate the renewal and digital-intelligent transformation of traditional infrastructure, and moderately advance new-type infrastructure construction; National Housing and Urban-Rural Development Work Conference: Focus on stabilizing the real estate market in 2026; SMIC has already implemented price increases on some capacity, with hikes around 10%.

Spot Market:

Shanghai: In the Shanghai area yesterday, refined zinc procurement sentiment was 2.25, while sales sentiment was 2.60. Zinc futures maintained a fluctuating trend. Market traders primarily focused on selling, but downstream enterprise demand was weak nearing the end of the year. Traders faced difficulties selling and chose to lower spot premium quotes. Downstream enterprises made purchases based on just-in-time procurement. Overall spot trading performance was poor.

Guangdong: In the Guangdong area yesterday, refined zinc procurement sentiment was 2.06, while sales sentiment was 2.55. Overall, the zinc price center edged down slightly yesterday, but the decline was limited. Coupled with relatively average consumption in Guangdong, the market maintained just-in-time procurement. However, influenced by the Shanghai-Guangdong price spread, some east China traders and enterprises were relatively active in purchasing. Additionally, with continued destocking in Guangdong, spot premiums/discounts rose slightly.

Tianjin: In the Tianjin area yesterday, refined zinc procurement sentiment was 1.9, while sales sentiment was 2.53. Zinc prices pulled back slightly yesterday, but did not reach downstream psychological price levels. Downstream restocking was primarily for immediate needs, while traders slightly lowered premiums to facilitate sales. Trading was mainly among traders, and overall market activity was sluggish.

Ningbo: In Ningbo yesterday, spot cargo volume remained low, with few traders offering quotes. Amid sustained tightness, spot premiums remained high. Downstream enterprises made purchases based on just-in-time procurement. Overall spot trading showed no improvement.

Social Inventory: On December 22, LME zinc inventory decreased by 275 mt to 98,975 mt, a drop of 0.28%. According to SMM communication and understanding, as of this Monday (December 22), domestic inventory increased.

Zinc Price Forecast: Overnight, LME zinc recorded a bullish candlestick, supported by the middle Bollinger Band. The US dollar index continued to weaken further, nonferrous metals generally rose, and copper prices hit new highs again, driving zinc prices to rise as well. However, the LME Cash-3M contango structure persisted; LME zinc rose first then fell, with the overall center slightly moving upward. Overnight, SHFE zinc recorded a bearish candlestick, supported by the 5/10-day daily average below. Driven by the LME, the night session of SHFE zinc opened higher with a gap. However, year-end downstream consumption performance was average, and the zinc ingot export window remained closed, leading to insufficient upward momentum for SHFE zinc. After opening, it fluctuated downward.

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