Weak US Dollar, LME Zinc Center Shifts Upward [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for January 26

Futures: On Friday, LME zinc opened at $3,241/mt, initially fluctuating around the daily average before edging down to a low of $3,214/mt during European trading hours. Subsequently, bulls bought on dips, pushing prices up to a high of $3,278.5/mt, and it finally closed up at $3,269/mt, a gain of $36/mt (up 1.11%). Trading volume decreased to 9,468 lots, while open interest increased by 1,359 lots to 230,000 lots. On Friday, the most-traded SHFE zinc 2603 contract opened at 24,715 yuan/mt, quickly hitting a high of 24,880 yuan/mt initially before losing upward momentum and pulling back to consolidate around the daily average. It ultimately closed up at 24,690 yuan/mt, rising 125 yuan/mt (up 0.51%). Trading volume decreased to 86,008 lots, and open interest increased by 3,607 lots to 124,000 lots.

Macro: Gold breaks above the $5,000 mark, silver enters the "three-digit" era; Trump claims the US will acquire "sovereignty" over the area where the US military base in Greenland is located; US media reports the US Treasury has taken initial steps toward intervening in the foreign exchange market; US aircraft carrier strike group arrives in the Indian Ocean; Iranian official states Iranian armed forces are on full alert; Senate Democrats vow to block Homeland Security funding, raising government shutdown risk again; IMF: US dollar's share of global foreign exchange reserves falls below 60%; National market operation and consumption promotion work conference held in Beijing.

Spot Market:

Shanghai: Purchasing sentiment for refined zinc in Shanghai was 2.08, while selling sentiment was 2.56. Futures zinc prices rose MoM, downstream enterprises had made some purchases earlier, leading to a resurgence of wait-and-see sentiment. Overall spot trades were sluggish on Friday, with traders actively offering and quoting, and spot premiums in the market declined MoM.

Guangdong: Purchasing sentiment for refined zinc in Guangdong was 2.00, while selling sentiment was 2.49. Overall, zinc price center rose on Friday, downstream purchasing enthusiasm decreased. Meanwhile, low inventory in Guangdong led traders to hold prices firm for warehouse spot goods, but actual market transactions were generally low. Coupled with a widening price spread between futures contracts last Friday, spot premiums and discounts slightly decreased.

Tianjin: Purchasing sentiment for refined zinc in Tianjin was 1.92, while selling sentiment was 2.25. Zinc prices rebounded on Friday, environmental protection alerts resurfaced in the north, most downstream enterprises entered holiday mode, demand weakened, trader quotations were chaotic, trading was mainly among traders, and overall market transactions were average.

Ningbo: Divergence in spot market quotations persisted. On Friday, futures zinc prices rose, downstream zinc enterprises had low purchase willingness, spot purchases remained as needed, and overall spot trades were average. Social Inventory: On January 23, LME zinc inventory decreased by 200 mt to 111,500 mt, down 0.18%. According to SMM communication, as of January 22, domestic inventory declined again.

Zinc Price Forecast: Last Friday, the LME zinc recorded a bullish candlestick, with the daily candlestick's center moving upward, and the MACD turning from bearish to positive territory. Last Friday, geopolitical risks escalated, the US dollar weakened, non-ferrous metals collectively rebounded, gold broke through the $5,000 mark, and the LME zinc's center moved upward. Last Friday, SHFE zinc recorded a small bearish candlestick, with various moving averages below providing support. Macro sentiment drove the zinc price's center upward; on the fundamentals side, some domestic smelters implemented production cuts, and social inventory recorded another decline, providing bottom support for zinc prices.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.