Market Concerns Over Supply Intensify, LME Zinc Rallies [SMM Morning Meeting Summary]

SMM, May 12:

Futures: Overnight, LME zinc opened at $3,437/mt. Early in the session, LME zinc fluctuated downward, reaching a low of $3,405/mt during European trading hours. Bulls then increased positions, and LME zinc fluctuated upward throughout, touching a high of $3,488/mt near the close. It finally closed up at $3,482/mt, up $41/mt or 1.19%. Trading volume increased to 11,012 lots, and open interest rose by 1,090 lots to 241,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened at 24,255 yuan/mt. Early in the session, bulls increased positions, and SHFE zinc fluctuated upward, touching a high of 24,550 yuan/mt before fluctuating. It finally closed up at 24,445 yuan/mt, up 360 yuan/mt or 1.49%. Trading volume fell to 76,020 lots, and open interest rose by 4,663 lots to 88,353 lots.
Macro:
Starmer faced another "forced resignation"; Peru issued an emergency decree on the energy crisis; India is expected to plan gold purchase restrictions and other measures; Iranian media reported that Iran deployed deep-diving submarines in the Strait of Hormuz; Trump reportedly considered the possibility of resuming military operations; Trump will pay a state visit to China from May 13 to 15; some bullet train tickets on the Beijing-Shanghai High-Speed Railway announced a 20% fare increase.
Spot market:
Shanghai: In Shanghai, the purchasing sentiment for refined zinc was 2.02, and the shipment sentiment was 2.45. Yesterday, not many traders shipped in the market. Futures zinc prices fluctuated. At the beginning of the week, downstream enterprises inquired about prices and restocked. Some factories priced accordingly. Overall transactions remained mostly on a need basis, and spot premiums remained firm.
Guangdong: In Guangdong, the purchasing sentiment for refined zinc was 1.73, and the sales sentiment was 2.45. Yesterday, the zinc price center moved lower MoM, but prices still held above 24,000. Combined with traders' relatively high quotes in the market, downstream enterprises faced greater stockpiling pressure. Enterprise purchases were mostly for immediate needs, and the spot market performed relatively average.
Tianjin: In Tianjin, the purchasing sentiment for refined zinc was 1.87, and the shipment sentiment was 2.29. Yesterday, zinc prices pulled back slightly, but downstream enterprises still held a wait-and-see attitude. There were fewer price inquiries. Circulating cargo volume in the Tianjin market remained limited. Traders' shipment premiums edged up slightly. Overall market transactions were average.
Ningbo: Recently, spot cargo in the Ningbo market has been relatively scarce. Traders in the market continued to raise spot quotes. Yesterday, premiums continued to rise. Some downstream enterprises made pricing purchases. Spot transactions remained on a need basis.
Social inventory: On May 11, LME zinc inventory decreased by 300 mt to 110,300 mt, down 0.27%. According to SMM market communication, as of May 11, China's inventory increased.
Zinc price outlook: Overnight, LME zinc recorded a large bullish candlestick with a long lower shadow. Continued US-Iran tensions kept energy supply risks lingering. Peru issued an emergency decree on the energy crisis. Market concerns about supply deficit intensified, and LME zinc rallied. LME zinc is expected to hold up well today. Overnight, SHFE zinc recorded a large bullish candlestick. Macro sentiment turned bullish, supply tightness sentiment intensified, and combined with China's zinc concentrate TCs falling to historic lows, SHFE zinc rallied. SHFE zinc is expected to hold up well today.

Data source statement: Except for publicly available information, other data are processed by SMM based on publicly available information, market communication, and SMM's internal database models. They are for reference only and do not constitute decision-making advice.