Zinc Supply-Demand Imbalance Not Yet Prominent, Mainly Following Macro Trends [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 30

Futures: Overnight, LME zinc opened at $3,102/mt. Initially, it fluctuated around the daily average line, then climbed to a high of $3,146.5/mt near European trading hours. Subsequently, bears sold at highs, pushing it below the daily average line. It finally closed down at $3,084/mt, falling $2.5/mt, a decrease of 0.08%. Trading volume increased to 13,418 lots, and open interest rose by 1,079 lots to 228,000 lots. Overnight, the most-traded SHFE zinc 2602 contract opened at 23,180 yuan/mt. After quickly reaching a high of 23,325 yuan/mt early in the session, bulls took profits and exited, causing the price center to shift downward below the daily average line. It finally closed down at 23,170 yuan/mt, falling 55 yuan/mt, a decrease of 0.24%. Trading volume decreased to 78,086 lots, and open interest fell by 331 lots to 93,356 lots.

Macro: Trump considered suing Powell for incompetence; Trump stated U.S. forces struck a large facility during an operation in Venezuela; Trump issued threats regarding Iran's ballistic missile and nuclear issues; Russia claimed 91 Ukrainian drones attacked Putin's residence, which Ukraine denied. The State Administration for Market Regulation deployed key tasks for the next year; two departments clarified matters related to pre-tax deductions for advertising and business promotion expenses.

Spot Market:

Shanghai: The refined zinc procurement sentiment in Shanghai was 2.06, and the sales sentiment was 2.5. With the New Year's Day holiday approaching, most market traders closed their books and took a break. Yesterday, zinc ingot availability in Shanghai was limited, and suppliers were unwilling to sell at low prices, continuing to hold prices firm, which pushed Shanghai spot premiums higher. Downstream enterprises had largely completed their purchases earlier, resulting in sluggish spot trading yesterday.

Guangdong: The refined zinc procurement sentiment in Guangdong was 2, and the sales sentiment was 2.57. Overall, yesterday, the zinc price center rose. Downstream enterprises mainly made just-in-time procurement, while some traders held a somewhat bullish view on prices, leading to lower willingness to sell.

Tianjin: The refined zinc procurement sentiment in Tianjin was 1.91, and the sales sentiment was 2.03. Yesterday, the zinc price center continued to move higher. Downstream buyers were cautious due to high prices and purchased cautiously. Environmental protection restrictions in Hebei remained in place, and some large plants had holiday arrangements for New Year's Day, leading to weaker demand. Most traders were engaged in year-end settlement, resulting in fewer suppliers in the market and chaotic quotations. Overall market trading was average.

Ningbo: With the New Year's Day holiday approaching, there were almost no spot quotations in the Ningbo market yesterday. Downstream enterprises had largely completed their pre-holiday stockpiling earlier, leading to almost no activity in the spot market and a relatively sluggish pre-holiday atmosphere.

Social Inventory: On December 29, LME zinc inventory decreased by 325 mt to 106,550 mt, a drop of 0.3%. According to SMM communication, domestic inventory continued to decline as of December 29.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a long upper shadow bearish candlestick, with various moving averages providing support below. After the Christmas holiday, LME zinc performed relatively stable compared to other metals, with no prominent supply-demand imbalance for the time being, mainly following macro trends. After a brief fund-driven rally during the session, it pulled back, maintaining an overall sideways movement. Overnight, the SHFE zinc contract recorded a bearish candlestick, with the KDJ indicator's opening narrowing. From an inventory perspective, social inventory declined again, but the TC reduction narrowed, leaving limited downside room. Consumption also showed no highlights, with zinc prices expected to move mainly within a range.

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.