Macro sentiment remains favorable, LME zinc fluctuates at highs [SMM Morning Meeting Minutes]

SMM January 14 News:

Futures: Overnight, LME zinc opened at $3,211/mt. At the beginning of the session, LME zinc briefly dipped to a low of $3,190.5/mt, then the center moved up, with LME zinc reaching a high of $3,277/mt during the night session. Subsequently, due to insufficient upward momentum, the center pulled back slightly, and finally closed down at $3,202/mt, a decrease of $11.5/mt, or 0.36%. Trading volume increased to 19,113 lots, and open interest changed by 1,082 lots to 232,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 24,560 yuan/mt. At the start of the session, bulls added positions, pushing SHFE zinc to a high of 24,855 yuan/mt. Later, as upward momentum waned, SHFE zinc fluctuated downward, hitting a low of 24,435 yuan/mt at the end of the session, and finally closed up at 24,490 yuan/mt, an increase of 210 yuan/mt, or 0.86%. Trading volume decreased to 134,000 lots, and open interest increased by 8,139 lots to 119,000 lots.

Macro: US December CPI cooled unexpectedly, leading traders to bet more on a US Fed interest rate cut in April; Trump: All meetings with Iranian officials have been canceled; CME plans to launch a 100-ounce silver futures contract on February 9; Venezuela's national oil company plans to restart wells to restore crude oil capacity; GFFE adjusts trading fees and limits for lithium carbonate futures contracts; The US eases restrictions on exports of Nvidia H200 chips to China.
Spot Market:
Shanghai: In Shanghai yesterday, the purchasing sentiment for refined zinc was 2.10, and the selling sentiment was 2.55. There were many traders offering goods in the Shanghai market, and spot premiums continued to decline. In the morning, the futures trend was strong, but downstream enterprises remained cautious, showing low willingness to purchase, resulting in sluggish overall spot transactions, mainly between traders.
Guangdong: In Guangdong yesterday, the purchasing sentiment for refined zinc was 1.93, and the selling sentiment was 2.58. Overall, the zinc price center rose rapidly, and market transactions weakened as prices went up. However, with continuously decreasing inventory in Guangdong, there was still some sentiment to hold prices firm, and end-users made just-in-time procurement, causing spot premiums and discounts to rise slightly.
Tianjin: In Tianjin yesterday, the purchasing sentiment for refined zinc was 1.87, and the selling sentiment was 2.41. Zinc prices continued to rise, and environmental protection-driven production restrictions affected downstream purchases. Downstream enterprises restocked out of necessity, while traders lowered their quotes to sell, leading to a decline in premiums. Overall, market transactions were sluggish.
Ningbo: Imported zinc ingots continued to flow into the Ningbo market. Orders for downstream alloy factories were poor, and previous purchases had already built up some inventory. With rising zinc prices, the purchasing sentiment was weak, and overall spot transactions were sluggish.
Social Inventory: On January 13, LME zinc inventory increased by 100 mt to 106,900 mt, a decrease of 0.09%. According to SMM, as of January 12, domestic inventory decreased slightly.
Zinc Price Forecast: Overnight, LME zinc recorded a small bearish candlestick with a long upper shadow. The US core CPI for December unexpectedly cooled, prompting traders to increase bets on a US Fed interest rate cut in April. Although the macro environment remains favorable, market concerns over demand persist, leading to a slight downward shift in LME zinc's center. Overnight, SHFE zinc recorded a small bearish candlestick with a long upper shadow. Expectations for a US interest rate cut have resurfaced, and macro sentiment remains positive. Additionally, domestic inventory saw slight destocking. Although consumption has weakened, the impact of fundamentals on SHFE zinc is limited, resulting in an upward shift in its center.

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, and are for reference only, not constituting decision-making advice.