Capital continued to flow in, LME zinc center rose [SMM Morning Meeting Minutes]

SMM Jan. 16:

Futures: Overnight, LME zinc opened at $3,280/mt. At the beginning of the session, bulls increased their positions, and LME zinc quickly surged to a high of $3,355/mt. Subsequently, with both long and short positions active, LME zinc fluctuated considerably. Entering the night session, LME zinc plunged to a low of $3,258.5/mt, then its price center rebounded, eventually closing up at $3,313.5/mt, up $23.5/mt, a gain of 0.71%. Trading volume increased to 19,677 lots, and open interest rose by 3,117 lots to 231,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 25,120 yuan/mt. Initially, SHFE zinc quickly dipped to a low of 24,720 yuan/mt. Later, bulls increased their positions, and SHFE zinc rapidly rose to a high of 25,155 yuan/mt, then traded within a range, eventually closing up at 25,125 yuan/mt, up 35 yuan/mt, a gain of 0.14%. Trading volume decreased to 215,000 lots, while open interest increased by 4,538 lots to 148,000 lots.
Macro: Trump postponed the decision on whether to launch a military strike against Iran; Trump stated he would head to Venezuela and expects Venezuela's acting president to visit the US; US initial jobless claims were lower than expectations; Informed sources: The Bank of Japan may keep interest rates unchanged in January; The central bank introduced eight measures to enhance support via structural monetary policy tools; Central Bank Deputy Governor Zou Lan: There is still some room for RRR cuts and interest rate cuts this year.
Spot Market:
Shanghai: Yesterday, the purchasing sentiment for refined zinc in the Shanghai area was 1.84, while the selling sentiment was 2.7. In the morning, zinc futures prices surged rapidly, reaching near one-year highs. Market traders actively offered spot cargoes, but downstream enterprises showed almost no willingness to purchase, resulting in nearly no transactions in the spot market, and spot premiums continued to decline.
Guangdong: Yesterday, the purchasing sentiment for refined zinc in the Guangdong area was 1.87, while the selling sentiment was 2.5. Overall, zinc prices showed a significant rise yesterday. Downstream enterprises exhibited a strong fear of high prices, with extremely low purchasing enthusiasm and few inquiries. Meanwhile, traders offering spot cargoes maintained relatively high premiums and discounts, leading to sluggish transactions in the spot market.
Tianjin: Yesterday, the purchasing sentiment for refined zinc in the Tianjin area was 1.61, while the selling sentiment was 2.21. Zinc prices surged continuously, making them unaffordable for downstream users. Coupled with environmental protection requirements in the north, some downstream enterprises considered initiating plans for the Chinese New Year break. Traders lowered their offers to sell cargoes, leading to a decline in premiums. Overall, the market saw almost no transactions.
Ningbo: In the morning, zinc prices rose significantly above 25,000 yuan/mt. Traders continued to lower spot premiums to sell cargoes, but downstream enterprises showed a strong fear of high prices. There were almost no inquiries or offers yesterday, resulting in overall sluggish trading in the market.
Social Inventory: On Jan. 15, LME zinc inventory decreased by 25 mt to 106,700 mt, a drop of 0.02%. According to SMM communication, as of Jan. 15, domestic inventory increased slightly.
Zinc Price Forecast: Overnight, the LME zinc recorded a long upper shadow bullish candlestick. Although initial jobless claims unexpectedly declined and US interest rate cut expectations weakened, geopolitical uncertainties persist, with continued capital inflows driving the LME zinc center higher. Overnight, SHFE zinc recorded a small bullish candlestick. Overseas macro sentiment remains relatively positive, while domestic inventory buildup fell short of expectations. Continued capital inflows and high capital crowding have led to a further upward shift in the SHFE zinc 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, for reference only and do not constitute decision-making advice.