Macro and Fundamentals Continue to Intertwine, LME Zinc and SHFE Zinc Continue to Rise [SMM Market Review - Price Weekly Commentary]

LME Zinc: At the beginning of the week, uncertainty intensified as the Trump administration launched a criminal investigation into Fed Chairman Powell, raising market concerns over the US Fed's independence and the long-term outlook for the US dollar. Combined with elevated geopolitical risks, the US dollar index came under pressure and declined, allowing LME zinc to rise accordingly. Subsequently, an unexpected cooling in the US core CPI for December led traders to increase bets on a US Fed interest rate cut in April, prompting a rebound in the US dollar index and a slight pullback in LME zinc. Later, despite retail sales data exceeding expectations, political uncertainty surrounding the US Fed's independence persisted, causing the US dollar index to close lower. Along with geopolitical risks, precious metals continued to rally, driving LME zinc higher. Afterwards, US initial jobless claims unexpectedly fell, weakening expectations for an interest rate cut, but geopolitical uncertainties remained and capital activity was relatively high, leading LME zinc to maintain a fluctuating trend. As of 15:00 Friday, LME zinc recorded $3,254/mt, an increase of $105/mt, up 3.33%.

SHFE Zinc: At the beginning of the week, domestically, overall fundamentals saw relatively small changes, but macro sentiment remained positive with high capital enthusiasm, pushing SHFE zinc continuously higher. Subsequently, high prices led to relatively average demand in the spot market, with sluggish end-use consumption, but bulls remained relatively active overall, causing SHFE zinc to maintain a fluctuating trend. Later, as overseas macro sentiment stayed positive, domestic capital remained active with high crowding, coupled with the LME's announcement that it would stop accepting registrations for KZ-SHG 99.995 and YP-SHG warrants effective April 14 this year, SHFE zinc was affected and continued to surge higher. Afterwards, domestic social inventory increased slightly, and some capital exited, leading SHFE zinc to edge lower. However, the overseas market trend remained strong, and SHFE zinc recovered some losses driven by the external market. Later, insufficient support from domestic fundamentals caused the price center of SHFE zinc to continuously decline. As of 15:00 Friday, SHFE zinc recorded 24,750 yuan/mt, an increase of 735 yuan/mt, up 3.06%.