LME Zinc Maintained Wide Swings Amid Macro Disturbances [SMM Morning Meeting Minutes]

Futures:

Overnight, LME zinc opened at $3,316/mt. In early trading, LME zinc fluctuated upward and touched a high of $3,331.5/mt, after which prices fell rapidly. It then rebounded and recovered the losses, but during European trading hours, bears cut positions and LME zinc quickly dipped to $3,284/mt. During the night session, amid a tug-of-war between longs and shorts, LME zinc gradually recouped its losses and returned above the average price line to fluctuate rangebound, eventually closing down at $3,314.5/mt, down $1/mt, or 0.03%. Trading volume fell to 82,887 lots, and open interest increased by 527 lots to 217,000 lots. Overnight, the most-traded SHFE zinc 2604 contract opened at 24,360 yuan/mt. In early trading, SHFE zinc briefly touched a high of 24,390 yuan/mt, then quickly fell to a low of 24,205 yuan/mt. Thereafter, amid a tug-of-war between longs and shorts, SHFE zinc fluctuated rangebound, and finally closed down at 24,240 yuan/mt, down 60 yuan/mt, or 0.25%. Trading volume fell to 35,766 lots, and open interest increased by 1,359 lots to 74,085 lots.

Macro: Trump said the US made a lot of money when oil prices rose; the important thing was to stop Iran from obtaining nuclear weapons; the market scaled back expectations for US Fed interest rate cuts, and Trump said Powell should cut interest rate immediately; in his first statement, Iran’s new supreme leader said it would not abandon revenge, the Strait of Hormuz would remain closed, and a new front would be opened if necessary; the US energy secretary said he took full responsibility for the erroneous post; the US military would “most likely” escort ships through the Strait of Hormuz before month-end; the Trump administration planned to suspend the Jones Act to stabilize oil prices; CME warned that US government intervention in the oil futures market would trigger an epic disaster; the central bank said it would continue to implement a moderately accommodative monetary policy in the next stage; SHFE adjusted the price limit ranges and trading margin ratios for related gold and other futures contracts.

Spot:

Shanghai: Yesterday, refined zinc purchase sentiment in Shanghai was 2.1, and shipments sentiment was 2.62. On Thursday, Shanghai zinc ingot inventory continued to increase, and market supply was in surplus. Zinc prices fluctuated in the morning session, downstream enterprises still made limited purchases, and spot market transactions were weak. Some suppliers lowered spot quotes for shipments, and spot discounts continued to widen.

Guangdong: Refined zinc purchase sentiment in Guangdong was 2.02, and sales sentiment was 2.29. Yesterday morning, zinc prices extended their rise and continued to move higher. Overall spot market transactions were relatively average, downstream consumption was gradually recovering, but enterprises mainly made just-in-time procurement, and spot premiums were flat from the previous day.

Tianjin: Yesterday, refined zinc purchase sentiment in Tianjin was 2.2, and shipments sentiment was 2.52. Yesterday, zinc prices mainly fluctuated, while northern China was still affected by environmental protection-driven production restrictions. Coupled with the successive arrivals of previously priced zinc ingots, overall purchase sentiment was not high. Traders slightly lowered premiums for shipments, and overall market transactions remained relatively average.

Ningbo: Zinc futures fluctuated, and downstream enterprises made few purchase inquiries yesterday. Spot transactions were sluggish, traders quoted prices for shipments in a relatively indifferent manner, and spot discounts in the market widened.

Inventory: As of March 12, LME zinc inventory decreased by 150 mt to 98,750 mt, down 0.15%; as of March 12, inventory in China continued to increase.

Zinc Price Outlook: Overnight, LME zinc posted a small bearish candlestick with a long lower shadow. The middle Bollinger Band exerted resistance above, while the 60-day moving average provided support below. As the market remained wary of the conflict in the Middle East, the US dollar strengthened, while sticky inflation also hindered the pace of interest rate cuts, dragging the center of LME zinc lower. Overnight, SHFE zinc posted a small bearish candlestick. The middle Bollinger Band exerted resistance above, while the lower Bollinger Band provided support below. As of yesterday (March 12), China’s social inventory continued to rise to a three-year high. Domestic supply was ample, but downstream consumption showed mediocre performance, leaving fundamentals insufficient to support prices. However, affected by macro uncertainty, prices still found some support at the bottom.

Data source statement: Apart from public information, all other data were processed and derived by SMM based on public information, market communication, and SMM’s internal database model, and are for reference only and do not constitute decision-making advice.