Strong Wait-and-See Sentiment in the Market, LME Zinc Center Moves Higher [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,270/mt. In the early session, LME zinc dipped to $3,244.5/mt during a period of consolidation, then its center continued to rise, reaching a high of $3,348/mt during the session. After hitting the intraday high, it pulled back somewhat. During the night session, LME zinc hovered at highs, weakening slightly toward the close, and ultimately settled higher at $3,304/mt, up $47.5/mt or 1.46%. Trading volume increased to 122,000 lots, while open interest decreased by 1,382 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened higher with a gap at 23,920 yuan/mt. In the early session, SHFE zinc briefly touched a high of 23,970 yuan/mt before futures came under pressure and pulled back, dipping to 23,725 yuan/mt during the session. Toward the close, it rebounded slightly and maintained a fluctuating trend, ultimately settling higher at 23,820 yuan/mt, up 90 yuan/mt or 0.38%. Trading volume increased to 53,312 lots, while open interest increased by 337 lots to 78,650 lots.

Macro: Trump agreed to suspend bombing and strikes on Iran for two weeks. Trump stated that the 10-point proposal from Iran was a viable plan that could be used for negotiations. Iranian media reported that the situation on Kharg Island had been brought under control. A survey showed that OPEC oil production in March recorded the largest decline in decades. The PBOC increased its gold holdings for the 17th consecutive month. A national services industry conference was set to convene soon, with measures to expand capacity and improve quality in the services sector to be rolled out.

Spot cargo:

Shanghai: Yesterday, the refined zinc buying sentiment in the Shanghai region was 2.12, and the shipments sentiment was 2.71. In the morning, futures zinc prices maintained a fluctuating trend. Traders in the market mainly focused on shipments, and overall spot premiums were basically stable. However, downstream enterprises had certain raw material inventory, and zinc ingot purchases remained driven by rigid demand, with overall trading activity sluggish.

Guangdong: Yesterday, the refined zinc buying sentiment in the Guangdong region was 2, and the sales sentiment was 2.76. Downstream enterprises still had certain inventory. As zinc prices continued to maintain a fluctuating trend, enterprises showed insufficient purchasing enthusiasm, mostly stockpiling for rigid demand. Traders experienced sluggish shipments, and spot premiums continued to decline.

Tianjin: Yesterday, the refined zinc buying sentiment in the Tianjin region was 1.73, and the shipments sentiment was 2.43. Zinc prices continued to fluctuate at highs. Downstream raw material inventory remained relatively high, compounded by the gradual arrival of long-term contract deliveries, leading to low downstream purchasing willingness. Trading in the market was mainly among traders, who slightly lowered premiums to facilitate shipments. Overall market transactions were lackluster.

Ningbo: On the first trading day after the Qingming Festival, futures zinc prices fluctuated. Downstream enterprises had not yet fully consumed their raw material inventory. Yesterday, inquiry and buying sentiment was tepid, overall spot cargo transactions were sluggish, and spot premiums showed little change compared to pre-holiday levels.

Inventory: On April 7, LME zinc inventory decreased by 25 mt to 113,925 mt, a decline of 0.02%. According to SMM communications, as of April 7, China's inventory saw a slight inventory buildup.

Zinc price forecast: LME zinc recorded a bullish candlestick overnight, with the upper Bollinger Bands exerting pressure from above and the 10/20-day moving averages providing support from below. The market adopted a wait-and-see attitude ahead of the deadline set by the US, the US dollar index weakened, and the LME zinc center rose. Attention is on the upcoming US-Iran negotiations. SHFE zinc recorded a bearish candlestick overnight, with prices holding above the 5/20-day moving averages. Driven by LME, SHFE zinc opened higher with a gap, but the relatively high level of social inventory in China, combined with the currently lackluster spot market performance, exerted some pressure on the rise of zinc prices.

Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.