LME Zinc Ingot Inventory Exceeds 100,000 mt, LME Zinc Rises First Then Falls [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Minutes for December 25

Futures: Overnight, LME zinc opened at $3,105/mt. After opening, LME zinc fluctuated upward, touched a high of $3,132/mt, then pulled back all the way, approaching the session end it probed a low of $3,070/mt, followed by a slight rebound from the low. It finally closed down at $3,086.5/mt, down $10/mt, a decrease of 0.32%. Trading volume decreased to 5,944 lots, and open interest decreased by 646 lots to 227,000 lots. Overnight, the most-traded SHFE zinc 2602 contract opened at 23,085 yuan/mt. At the beginning of the session, it touched a high of 23,095 yuan/mt, then zinc prices fluctuated around the daily average line. Approaching the session end, it probed a low of 22,910 yuan/mt, then slightly rebounded near the daily average line. It finally closed down at 23,000 yuan/mt, down 230 yuan/mt, a decrease of 0.99%. Trading volume increased to 81,845 lots, and open interest increased by 81 lots to 95,116 lots.

Macro: US officials hinted that they prefer achieving goals regarding Venezuela through sanctions rather than military action; Zelenskyy announced a 20-point draft "peace plan" for Russia and Ukraine; Russia hopes to make amendments to the latest US peace plan proposal; Japan plans to cut ultra-long-term government bond issuance for the 2026 fiscal year to the lowest level in 17 years; Eight departments jointly issued 21 measures for financial support to accelerate the construction of the New Western Land-Sea Corridor; The central bank's monetary policy committee held its Q4 regular meeting: it will continue to implement moderately loose monetary policy; Beijing further optimized its real estate policies.

Spot Market:

Shanghai: Yesterday, the purchase willingness for refined zinc in the Shanghai area was 2.22, and the sales willingness was 2.61. As the year-end approaches, downstream enterprise orders are average. Coupled with the MoM rise in zinc futures prices yesterday, enterprises basically made purchases based on demand. Spot trades performed poorly, but traders showed strong sales willingness, successively lowering premium quotes yesterday. Overall trading still occurred mostly among traders.

Guangdong: Yesterday, the purchase willingness for refined zinc in the Guangdong area was 2.02, and the sales willingness was 2.58. Overall, as the price center of zinc rose, it became more difficult for traders to sell, the reported premiums/discounts gradually decreased, while the price spread between futures contracts widened, and spot premiums/discounts declined.

Tianjin: Yesterday, the purchase willingness for refined zinc in the Tianjin area was 1.87, and the sales willingness was 2.55. Yesterday, the price center of zinc moved up, downstream users were cautious about purchasing at high prices, mainly restocking for rigid demand. To facilitate sales, traders slightly lowered premiums. Trading was mainly among traders, and overall market turnover was sluggish.

Ningbo: Market traders continued to hold prices firm. Yesterday, spot premiums remained stable, but as zinc futures prices rose in the morning session, purchase willingness among downstream enterprises weakened. Overall spot transaction performance was average.

Social Inventory: On December 23, LME zinc inventory increased by 7,900 mt to 106,875 mt, an increase of 7.98%. According to SMM communication, as of this Monday (December 22), domestic inventory increased.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bearish candlestick, finding support below the 5- and 20-day daily averages. US Q3 GDP grew 4.3% QoQ, exceeding market expectations, with strong economic data boosting the demand outlook. However, LME zinc ingot inventory continued to rise above 100,000 mt. LME zinc initially rose before falling, maintaining its fluctuating trend. Overnight, SHFE zinc recorded a bearish candlestick, facing resistance above the 5- and 10-day daily averages. Influenced by LME movements, SHFE zinc opened lower with a gap during the night session. Downstream consumption remained sluggish towards the end of the year, but supply-side factors provided some support. SHFE zinc's decline was limited during the night session, although its price center shifted lower.

Data Source Statement: Data not from public sources are processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and not intended as decision-making advice.