The US dollar index strengthened, and LME zinc recorded a bearish candlestick [SMM Morning Meeting Minutes]

Futures: Last Friday, LME zinc opened at $3,420/mt, fluctuating considerably around the daily average in early trading, touching a high of $3,423.50/mt. During European trading hours, it fell below the daily average before recovering losses and returning above it. Towards the close, LME zinc fluctuated downward, hitting a low of $3,336.50/mt, and finally closed down at $3,370/mt, a decrease of $83/mt, or 2.40%. Trading volume increased to 142,000 lots, and open interest rose by 5,365 lots to 239,000 lots. Last Friday, the most-traded SHFE zinc 2603 contract opened at 25,735 yuan/mt, falling to a low of 25,520 yuan/mt in early trading. Subsequently, short covering pushed SHFE zinc above the daily average, reaching a high of 25,905 yuan/mt. It maintained a fluctuating trend towards the close, finally closing down at 25,775 yuan/mt, a decrease of 60 yuan/mt, or 0.23%. Trading volume decreased to 172,000 lots, and open interest fell by 3,467 lots to 102,000 lots.

Macro: The US government entered a technical, partial shutdown; Trump announced the nomination of Kevin Warsh as Fed Chairman; several Fed officials believed there was no need to cut interest rates at present; CME raised margin requirements for gold, silver, platinum, and palladium futures; US media reported the US signaled willingness to negotiate with Iran, with possible talks in Turkey; eight OPEC+ countries will maintain the original plan to pause oil production increases in March; Japan did not intervene in the yen in January; National Bureau of Statistics (NBS): January manufacturing PMI was 49.3%, down 0.8 percentage points MoM; SHFE adjusted price limits and trading margin ratios for silver futures contracts; multiple LOFs suspended trading for one hour today.

Spot:

Shanghai: Last Friday, the refined zinc purchasing sentiment in Shanghai was 1.88, while the selling sentiment was 2.69. As the Chinese New Year holiday approached, some downstream enterprises began holidays, overall downstream raw material demand increased. Coupled with high zinc futures prices in the morning session, there were almost no inquiries or purchases due to price aversion last Friday. Spot trades were sluggish, and spot premiums/discounts remained low.

Guangdong: Last Friday, the refined zinc purchasing sentiment in Guangdong was 1.82, while the selling sentiment was 2.43. Zinc prices continued to fluctuate at highs, and due to high prices and terminal holidays, downstream purchasing momentum was insufficient. Market transactions were sluggish, traders continuously lowered premiums/discounts to sell, but transactions remained scarce. As a result, Guangdong premiums/discounts showed a significant decline.

Tianjin: Last Friday, the refined zinc purchasing sentiment in Tianjin was 1.73, while the selling sentiment was 2.29. Last Friday, zinc prices continued to fluctuate at highs, downstream enterprises entered holiday pace, with almost no price inquiries. Market traders continued to lower premiums to sell, mainly trading among themselves, overall market transactions were sluggish.

Ningbo: Zinc futures prices continued to hover at highs, downstream enterprises' purchase willingness remained low, market transactions remained sluggish last Friday, and traders further lowered spot zinc quotations to facilitate sales, leading to a continued decline in market premiums.

Inventory: LME zinc inventory increased by 250 mt to 110,000 mt on January 30, up 0.23%; according to SMM communications, domestic zinc ingot inventory increased as of last Thursday (January 29).

Zinc Price Forecast: LME zinc recorded a bearish candlestick last Friday, with support provided by the 10/40-day daily average moving averages. Nonferrous metals generally declined last Friday, and the US dollar index strengthened significantly after US President Trump announced former Fed Governor Warsh as the next Fed Chairman candidate, causing LME zinc's center to decline. SHFE zinc recorded a small bullish candlestick last Friday, with support from the 10/40-day daily average moving averages. As more zinc downstream enterprises began holidays, spot market transactions across regions were sluggish, and end-use consumption weakened. SHFE zinc is expected to fluctuate at highs in the short term, with some upward pressure.

Data Source Statement: Data other than public information 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.