Macro Sentiment Digested, LME Zinc Retreats from Highs [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for January 19

Futures: On Friday, LME zinc opened at $3,307/mt, touched a high of $3,312/mt early in the session, then fluctuated downward, hitting a low of $3,195.5/mt near the close, and finally settled at $3,209/mt, down $104.5/mt, a drop of 3.15%. Trading volume decreased to 14,896 lots, while open interest increased by 806 lots to 232,000 lots. On Friday, the most-traded SHFE zinc 2603 contract opened at 24,560 yuan/mt. After opening, it fluctuated around the daily average line, reaching a high of 24,585 yuan/mt early in the session and a low of 24,335 yuan/mt near the close, finally settling at 24,405 yuan/mt, down 345 yuan/mt, a decline of 1.39%. Trading volume decreased to 138,000 lots, and open interest decreased by 8,582 lots to 134,000 lots.

Macro: Trump imposed tariffs on eight European countries over Greenland; the EU will hold an emergency meeting; multiple EU countries are considering tariff hikes on $93 billion worth of US goods exported to Europe; German military personnel suddenly and secretly withdrew from Greenland, with Berlin yet to explain the reason; the Syrian government reached an agreement with the Syrian Democratic Forces; Trump: wants Hassett to remain in his original job title; successful verification of manned spacecraft landing cushioning technology, a first for China's commercial aerospace industry; SHFE adjusts trading limits for silver and nickel futures related contracts; SDIC Silver LOF: suspended from market open until 10:30 on the 19th.

Spot Market:

Shanghai: On Friday, the refined zinc procurement sentiment in Shanghai was 2.04, and the sales sentiment was 2.64. Shanghai zinc ingot inventory continued to accumulate. On Friday, traders actively offered for sale. Although the zinc futures price pulled back MoM in the morning and some downstream users started pricing since Thursday evening, overall downstream demand remained weak during the off-season, and spot market transactions saw limited improvement.

Guangdong: On Friday, the refined zinc procurement sentiment in Guangdong was 1.86, and the sales sentiment was 2.51. Overall, on Friday, Guangdong quoted for contract rollover. While zinc prices hovered at highs and the price center gradually lowered, it did not reach the downstream psychological price level. Most transactions were among traders.

Tianjin: On Friday, the refined zinc procurement sentiment in Tianjin was 1.85, and the sales sentiment was 2.29. On Friday, zinc prices dropped back slightly but did not fall to the downstream psychological price level. Just-in-time procurement dominated. Trader offers were chaotic, overall premiums showed a downward trend, trading was mainly among traders, and overall market transactions were average.

Ningbo: On Friday, zinc futures prices pulled back but did not reach the downstream psychological price level. Most enterprises continued to anticipate a decline, purchase inquiry sentiment showed no significant improvement, spot market transaction performance was average, and overall premiums continued to decline.

Social Inventory: On January 15, LME zinc inventory decreased by 175 mt to 106,525 mt, a drop of 0.16. According to SMM communication and understanding, domestic inventory increased as of January 15.

Zinc Price Forecast: Last Friday, LME zinc recorded a bearish candlestick, with support from the 10-day daily average line below. Macro sentiment was gradually digested, funds reduced positions at high levels, and nonferrous metals generally fell. Considering insufficient fundamental support for zinc prices, LME zinc also declined significantly, and it is expected to fluctuate in the short term. Last Friday, SHFE zinc recorded a bearish candlestick, with support from the 20-day daily average line below. Domestic zinc concentrate TCs remained low, off-season zinc downstream orders performed poorly, and the weak supply-demand fundamentals persisted. Coupled with the drag from a sharp pullback in LME zinc prices, SHFE zinc subsequently pulled back.

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 not constituting decision-making advice.