High Capital Enthusiasm Lifts LME Zinc Center Upward [SMM Morning Meeting Minutes]

SMM Jan. 13:

Futures: Overnight, LME zinc opened at $3,157/mt. It briefly dipped to a low of $3,156/mt at the beginning of the session, then fluctuated upward as bears exited the market, touching a high of $3,165/mt toward the close. However, lacking upward momentum, the price center dropped back slightly, eventually settling at $3,222.5/mt, up $64.5/mt, a gain of 2.07%. Trading volume fell to 11,180 lots, while open interest increased by 397 lots to 233,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 24,290 yuan/mt. It fluctuated along the daily average initially, then plunged to a low of 24,060 yuan/mt. Subsequently, bulls increased their positions, pushing the contract to fluctuate upward and touch a high of 24,425 yuan/mt toward the close. It finally settled at 24,320 yuan/mt, up. Trading volume decreased to 73,159 lots, while open interest rose by 2,455 lots to 104,000 lots.
Macro: Trump: Any country doing business with Iran will face a 25% tariff; Besant warning: US Fed investigation sparks market volatility, may lead Powell to refuse to hand over power; US media: Trump will interview BlackRock executive Rick Rieder for the Fed Chairman position this week; SGE: Continue to manage recent market risk control work.
Spot Market:
Shanghai: The refined zinc procurement sentiment in Shanghai was 2.14 yesterday, while the sales sentiment was 2.59. Zinc ingot inventory continued to build up in Shanghai, with increased availability in the market. Coupled with weak downstream consumption and some Guangdong zinc ingots being continuously procured to the east China market, downstream enterprises mostly purchased low-priced delivered cargo. Overall spot transactions were poor, with the Shanghai market dominated by trader activity.
Guangdong: The refined zinc procurement sentiment in Guangdong was 1.94 yesterday, while the sales sentiment was 2.55. Overall, inventory in Guangdong continued to decline, and spot availability in the market decreased. Some traders showed a degree of willingness to hold prices firm, but with futures fluctuating at highs and downstream demand remaining sluggish, procurement enthusiasm was insufficient. Transactions were relatively sluggish yesterday.
Tianjin: The refined zinc procurement sentiment in Tianjin was 1.91 yesterday, while the sales sentiment was 2.13. Zinc prices mainly fluctuated at highs yesterday. Environmental protection alerts resurfaced in the north, downstream demand weakened, and purchases were limited. Traders slightly lowered their offers, and premiums pulled back slightly. Overall market transactions were sluggish.
Ningbo: Traders in the Ningbo market continued to actively sell, but downstream enterprises faced poor orders and strong wait-and-see sentiment. Purchases were mostly for rigid demand. Spot transaction performance was average, with market premiums dropping back slightly.
Social Inventory: LME zinc inventory decreased by 650 mt to 106,800 mt on Jan. 12, a drop of 0.6%. According to SMM communication, domestic inventory edged lower as of Jan. 12.
Zinc Price Forecast: Overnight, the LME zinc contract recorded a large bullish candlestick, with its center rising. The uncertainty surrounding the Trump administration's criminal investigation into the Fed Chairman has deepened, sparking market concerns over the independence of the US Fed and the long-term outlook of the US dollar. The US dollar index closed lower, while geopolitical risks continued to increase. Precious and non-ferrous metals generally rose, with a favorable macro market atmosphere and high capital enthusiasm, driving LME zinc higher. Overnight, the SHFE zinc contract recorded a small bullish candlestick with a long lower shadow. From a fundamental perspective, there are no prominent contradictions at the moment, but macro sentiment remains positive, and capital enthusiasm is high, leading to an upward shift in the center of SHFE zinc.
 

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