Macro Sentiment Gradually Digested, LME Zinc Slightly Declined [SMM Zinc Morning Meeting Minutes]

January 20 Zinc Morning Meeting Summary

SMM January 21 Zinc Morning Meeting Summary

Futures: Overnight, LME zinc opened at $3,226/mt. After the opening, LME zinc fluctuated downward, reaching a high of $3,237/mt at the beginning of the session and a low of $3,171/mt near the end, closing down at $3,175/mt, a decrease of $59/mt or 1.82%. Trading volume increased to 11,487 lots, while open interest decreased by 1,676 lots to 232,000 lots. The most-traded SHFE zinc 2603 contract opened at 24,300 yuan/mt. It initially reached 24,300 yuan/mt, then quickly dropped to near the daily average line, and subsequently fluctuated rangebound around this level. During the session, it hit a low of 24,075 yuan/mt, finally closing down at 24,165 yuan/mt, a decrease of 245 yuan/mt or 1%. Trading volume decreased to 74,321 lots, and open interest fell by 2,353 lots to 124,000 lots.

Macro: Trump held a press conference marking one year since his return to the White House; the European Parliament froze the approval process for the US-EU trade agreement; the Polish central bank approved a plan to purchase 150 mt of gold; the US Supreme Court did not rule on the challenge to the legality of Trump's global tariffs; the January LPR quotes were released, with both the 5-year and 1-year rates remaining unchanged; the Ministry of Finance and four other departments announced a policy to subsidize loans for small and medium-sized enterprises; the NDRC stated that it will study and formulate an implementation plan for expanding domestic demand from 2026-2030.

Spot Market:

Shanghai: In the Shanghai area, the refined zinc purchasing sentiment was 2.12, and the selling sentiment was 2.56. Futures zinc prices maintained a fluctuating trend. Downstream enterprises had completed their previous spot purchases, and yesterday's spot purchases remained at a necessary level. Overall, trading performance was moderate, with many traders in the Shanghai market, and spot premiums changed little.

Guangdong: In the Guangdong area, the refined zinc purchasing sentiment was 1.93, and the selling sentiment was 2.57. Overall, zinc prices fluctuated at highs, and Guangdong inventory continued to decline, providing some support to spot premiums and discounts. However, actual market demand was relatively moderate, with downstream procurement mainly driven by necessity.

Tianjin: In the Tianjin area, the refined zinc purchasing sentiment was 1.94, and the selling sentiment was 2.20. Yesterday, the center of zinc prices slightly shifted downward. Downstream enterprises still adopted a wait-and-see attitude, mainly restocking as needed. Traders' quotations were flat compared to the previous day, and overall market trading was moderate.

Ningbo: The Ningbo market had a relatively ample supply of zinc ingots. Yesterday, spot premium quotes were chaotic, with some traders holding firm on prices. However, downstream enterprise orders were weak, leading to moderate spot purchases, and overall spot trades were sluggish.

Social Inventory: On January 19, LME zinc inventory increased by 7,250 mt to 112,300 mt, a 6.9% increase. According to SMM communications, as of January 19, domestic inventory also increased.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a bearish candlestick, with support provided by the 20-day moving average. As market macro news was gradually digested, non-ferrous metals generally declined. Coupled with a continued increase in LME zinc ingot inventory, fundamentals provided insufficient support for zinc prices, leading to a reduction in long positions and a slight decline in LME zinc. Overnight, SHFE zinc recorded a bearish candlestick, with resistance formed by the 5-day moving average. Influenced by the decline in overseas markets, SHFE zinc opened lower with a gap during the night session. On the fundamentals side, the weak supply-demand situation for zinc persisted, and SHFE zinc also experienced a slight weakening. It is expected to maintain a fluctuating trend in the short term.

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.