LME Zinc Recorded a Five-Day Winning Streak, with Highs Reaching New Peaks Since August 2022 [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for January 30

Futures: Overnight, LME zinc opened at $3,396/mt. Early in the session, bulls increased positions, pushing LME zinc up along the daily average line to a high of $3,575.5/mt during the night session. Subsequently, bulls took profits and exited, causing LME zinc to retreat quickly, with its center shifting down to around $3,430/mt. It finally closed up at $3,453/mt, gaining $77.5/mt, an increase of 2.3%. Trading volume rose to 28,316 lots, and open interest increased by 913 lots to 234,000 lots. Overnight, the most-traded SHFE zinc 2603 contract opened at 26,200 yuan/mt. Early in the session, it climbed along the daily average line to a high of 26,985 yuan/mt. Following a broad pullback in nonferrous metals, SHFE zinc's center shifted down to 26,070 yuan/mt, finally closing up at 25,995 yuan/mt, gaining 325 yuan/mt, an increase of 1.27%. Trading volume increased to 336,000 lots, while open interest decreased by 2,434 lots to 112,000 lots.

Macro: Trump stated that he will announce the US Fed Chairman nominee next week and that interest rates should be lowered by 2 to 3 percentage points; Trump claimed that Putin agreed to a one-week ceasefire in parts of Ukraine; Iran issued warnings to merchant ships about live-fire naval exercises in the Strait of Hormuz on Sunday and Monday; CME Group raised margin requirements for gold, copper, and some aluminum futures; The US government faces another potential shutdown crisis; World Gold Council reported that global central banks were net buyers of 230 mt of gold in Q4. Strong gold demand momentum is expected to continue into 2026; The General Office of the State Council issued the "Work Plan for Accelerating the Cultivation of New Growth Points in Service Consumption"; SDIC Silver LOF: Trading was suspended from the market open on January 30 until the close; China plans to deploy more "space+" future industries.

Spot Market:

Shanghai: The refined zinc purchase willingness in Shanghai was 1.9, while the selling willingness was 2.77. Zinc futures prices surged again. Yesterday, traders and smelters actively offered spot cargoes, keeping overall spot premiums at low levels. However, downstream users began holidays, leading to weak demand for zinc ingots. Coupled with strong futures prices, purchase inquiries were scarce due to fear of high prices, resulting in relatively sluggish spot trades overall.

Guangdong: The refined zinc purchase willingness in Guangdong was 1.86, while the selling willingness was 2.48. Overall, zinc prices rose significantly yesterday, but market offers remained relatively firm. Downstream fear of high prices was intense, and some enterprises had received long-term contract deliveries early recently, leaving almost no stockpiling activity in the market. Spot premiums and discounts held steady.

Tianjin: The refined zinc purchase willingness in Tianjin was 1.79, while the selling willingness was 2.21. Zinc prices continued to rise sharply yesterday. Downstream buyers were cautious about purchasing due to high prices, with almost no inquiries. Traders lowered premiums further to move cargoes, leading to poor overall market transactions.

Ningbo: Zinc futures prices continued to rise, while downstream purchase willingness was poor. Overall spot transactions were weak yesterday. Traders lowered their spot offers further to secure deals, causing spot premiums in the market to weaken.

Social Inventory: On January 29, LME zinc inventory decreased by 625 mt to 109,750 mt, a drop of 0.57%; according to SMM communication, domestic inventory saw a slight buildup as of January 29.

Zinc Price Forecast: Overnight, LME zinc recorded a long upper shadow bearish candlestick, hitting a new high since August 2022, with the MACD bullish candlestick expanding. Overnight LME zinc showed strong momentum, but the night session saw nonferrous and precious metals plunge sharply due to a rebound in the US dollar after the US Fed released hawkish signals. However, LME zinc inventory continued destocking, and mine-side disruptions persisted, providing solid support at the bottom for zinc prices, leaving limited overall room for correction. Overnight, SHFE zinc recorded a long upper shadow bearish candlestick, with various moving averages below providing support. Overnight, SHFE zinc led gains in nonferrous metals, driven by the external market. On the fundamentals side, social inventory remained low, and zinc prices were generally undervalued, offering strong support. After a significant macro cooldown, zinc prices showed relative resilience against declines.

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.