Weakening US Dollar and Macro Boost Halt LME Zinc's Decline, Leading to Fluctuations [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes for January 20

Futures: Overnight, LME zinc opened at $3,224/mt, initially touched a high of $3,240/mt, then fluctuated downward along the daily average, hitting a low of $3,195/mt before rebounding above the daily average, finally closing up at $3,234/mt, an increase of $25/mt or 0.78%, with trading volume decreasing to 7,750 lots and open interest rising by 1,497 lots to 234,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 24,370 yuan/mt, fluctuated along the daily average after opening, touched a high of 24,500 yuan/mt during the session, hit a low of 24,335 yuan/mt early in the session, and finally closed down at 24,440 yuan/mt, a decrease of 10 yuan/mt or 0.04%, with trading volume decreasing to 59,628 lots and open interest falling by 240 lots to 128,000 lots.

Macro: Powell reportedly to testify in support of Cook; "mild hawk" Vujčić to replace ECB Vice President; Macron reportedly to decline Trump's "peace committee" invitation; Takachiho: to dissolve the House of Representatives on January 23 and hold a general election vote on February 8; National Bureau of Statistics (NBS): China's full-year 2025 GDP grew 5.0% year-on-year; Zhejiang Securities Regulatory Bureau: Jin Yongrong manipulated the securities market, imposed a 3-year market entry ban.

Spot Market:

Shanghai: Yesterday, the refined zinc procurement sentiment in Shanghai was 2.16, and the sales sentiment was 2.55. Zinc futures prices continued to pull back, traders in the Shanghai market mainly sold, some downstream users made some fixed-price purchases taking advantage of the low prices, overall spot premiums in the market rebounded, but downstream orders were weak in the off-season, and the overall spot transaction improvement fell short of expectations.

Guangdong: Yesterday, the refined zinc procurement sentiment in Guangdong was 1.91, and the sales sentiment was 2.59. Overall, the zinc price center moved downward yesterday, market activity increased, but the current price has not fully reached downstream psychological price levels, end-users mostly engaged in just-in-time procurement or fixed-price operations, with more transactions among traders.

Tianjin: Yesterday, the refined zinc procurement sentiment in Tianjin was 1.93, and the sales sentiment was 2.21. Zinc prices continued to pull back yesterday, but downstream users still had a bearish psychology, coupled with gradually declining demand, downstream just-in-time procurement was dominant, traders' offers increased slightly, overall market transactions were average.

Ningbo: Downstream enterprise orders are weak in the off-season, spot purchase sentiment remains relatively weak, overall transaction performance is average, and with ample cargo volume in the Ningbo market, some traders continued to lower spot offers to sell.

Social Inventory: On January 16, LME zinc inventory decreased by 1,475 mt to 105,050 mt, a drop of 1.38%; according to SMM communication, as of January 19, domestic inventory increased.

Zinc Price Forecast: Overnight, the LME zinc recorded a bullish candlestick, with the 5-day daily average forming resistance above. Trump threatened to impose additional tariffs on Europe, and the US dollar index weakened. Additionally, China's gross domestic product grew by 5% year-on-year in 2025, and economic data also boosted zinc prices. The decline in LME zinc temporarily halted, maintaining a fluctuating trend. Overnight, SHFE zinc recorded a bullish candlestick, with the middle Bollinger Band providing support. Recently, downstream orders have been weak during the off-season, some downstream sectors have already started holidays, and domestic zinc ingot inventory continued to build. Fundamental support for zinc prices is insufficient, but supported by LME zinc prices, SHFE zinc is expected to maintain a fluctuating trend in the short term.

Data Source Statement: Except for public 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.