With a favorable macro atmosphere, LME zinc fluctuated at highs [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for December 31

Futures: Overnight, LME zinc opened at $3,087/mt, moved up stepwise along the daily average line during the session, touched a high of $3,143.5/mt before closing, and finally settled at $3,130/mt, up $46/mt, or 1.49%. Trading volume decreased to 11,505 lots, while open interest increased by 4,129 lots to 232,000 lots. Overnight, the most-traded SHFE zinc 2602 contract opened at 23,360 yuan/mt. At the beginning of the session, bears reduced their positions, pushing the price center upward to a high of 23,455 yuan/mt. However, due to insufficient upward momentum, the price center later moved down, and the contract finally settled at 23,400 yuan/mt, up 20 yuan/mt, or 0.09%. Trading volume fell to 58,121 lots, while open interest dropped by 593 lots to 92,877 lots.
Macro: US Fed meeting minutes indicated serious disagreements among officials, with a majority supporting further interest rate cuts; OPEC+ is expected to continue suspending its crude oil production increase plan; tensions in Yemen escalated as the Saudi-led coalition launched airstrikes on the port of Mukalla; the optimized implementation plan for the program of large-scale equipment upgrades and consumer goods trade-ins for 2026 was released; province-wide pilot programs for a further 30-year extension of rural contracted land will be fully launched.

Spot Market:

Shanghai: The purchasing sentiment for refined zinc in Shanghai was 2.04, while the selling sentiment was 2.47. Spot supply in the Shanghai market remained scarce. The futures price was lower this morning compared to yesterday, leading most traders to raise their spot quotations. Spot premiums continued to rise today. Downstream enterprises have largely completed their New Year's Day stockpiling, resulting in continued sluggish spot trades in the market.

Guangdong: The purchasing sentiment for refined zinc in Guangdong was 1.98, while the selling sentiment was 2.54. Overall, zinc prices kept rising today, but downstream purchasing enthusiasm was insufficient. Traders found it relatively difficult to sell, leading to lower quotations. However, the price spread between futures contracts narrowed today, supporting stable spot premiums/discounts.

Tianjin: The purchasing sentiment for refined zinc in Tianjin was 1.93, while the selling sentiment was 2.01. Zinc prices fluctuated today, with low downstream purchasing sentiment. Environmental protection measures in Hebei significantly impacted production operations, leading to weak demand in the north. Most traders were engaged in year-end settlements, resulting in fewer sellers in the market and chaotic quotations. Overall market trading was moderate.

Ningbo: Most traders in the market were on break, and spot zinc ingot supply remained scarce. Some downstream users still had inquiries, but market quotations varied widely. Overall premiums remained high. Other downstream users had basically completed their purchases, leading to continued sluggish spot trading overall.

Social Inventory: LME zinc inventory decreased by 225 mt to 106,325 mt on December 30, a drop of 0.21%. According to SMM communications, domestic inventory continued to decline as of December 29.

Zinc Price Forecast: Overnight, LME zinc formed a bullish candlestick with an upward shift in its price center, and the KDJ indicator's opening expanded upward. The macro atmosphere in the market was favorable ahead of the New Year's Day holiday, with high capital enthusiasm and strong speculative buying sentiment, keeping zinc prices fluctuating at highs. Overnight, SHFE zinc formed a small bullish candlestick. Treatment charges remain low, but the import window is closed, reducing supply-side pressure for zinc. With macro conditions heating up, SHFE zinc is expected to fluctuate mainly before the holiday.

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.