Market Concerns Over Supply Continued to Intensify, LME Zinc Rose to Multi-Year Highs [SMM Morning Meeting Summary]

SMM May 14:

Futures: LME zinc opened at $3,536/mt overnight. After an initial tug-of-war between longs and shorts, LME zinc swung wildly along the daily moving average. Entering the night session, it briefly dipped to a low of $3,524.5/mt, then bulls increased positions, pushing LME zinc to a multi-year high of $3,582.5/mt. The center then pulled back slightly, closing up at $3,552/mt, up $19.5/mt or 0.55%. Trading volume increased to 15,506 lots, and open interest rose 488 lots to 242,000 lots. The most-traded SHFE zinc 2606 contract opened at 24,830 yuan/mt overnight. Bulls increased positions early on, and SHFE zinc fluctuated upward, touching a high of 24,970 yuan/mt near the end of the session before losing upward momentum and shifting lower. It closed up at 24,915 yuan/mt, up 85 yuan/mt or 0.34%. Trading volume fell to 50,281 lots, and open interest rose 132 lots to 91,706 lots.
Macro:
UK media reported the Health Secretary is preparing to resign to run for Labour leader; Nvidia, Apple, and Google market caps all hit new highs; US Fed Collins: rate hikes may be needed if inflation does not ease; US April PPI MoM and YoY growth rates both hit four-year highs; OPEC cut global oil demand growth expectations; Vance: Iran negotiations are making progress; US President Trump arrived in Beijing to begin his China visit.
Spot market:
Shanghai: The refined zinc purchase sentiment in Shanghai was 1.85, and shipments sentiment was 2.6. Zinc futures prices rose notably, downstream enterprises continued to fear high prices with almost no inquiries or purchases, overall market trading turned notably sluggish, traders offered shipments passively, and spot premiums edged down slightly MoM.
Guangdong: The refined zinc purchase sentiment in Guangdong was 1.6, and sales sentiment was 2.5. Zinc price center moved higher yesterday, market trading was sluggish, traders had difficulty with shipments, and slightly lowered premiums to facilitate transactions, driving spot premiums lower yesterday.
Tianjin: The refined zinc purchase sentiment in Tianjin was 1.75, and shipments sentiment was 2.38. Zinc prices continued to surge yesterday, downstream buyers were cautious due to fear of high prices with low purchase willingness, traders slightly lowered spot premiums for shipments, and overall market trading was poor.
Ningbo: Cargo availability in the Ningbo market remained limited. Foggy weather delayed some vessel arrivals, traders offered few quotes, spot premiums for some zinc ingots were adjusted down MoM, downstream alloy plants remained on the sidelines, and overall spot trading was poor.
Social inventory: On May 13, LME zinc inventory increased 1,125 mt to 111,425 mt, up 1.02%. According to SMM market communication, as of May 11, China's inventory increased.
Zinc price outlook: LME zinc posted a small bullish candlestick overnight. Inflation accelerated during the Iran war, and expectations for US Fed interest rate hikes this year grew, but market sentiment regarding tight supply and rising costs continued to heat up, driving LME zinc higher. LME zinc is expected to hold up well today. SHFE zinc posted a small bullish candlestick overnight. The market remained concerned about ore supply, zinc concentrate TCs stayed at low levels, and SHFE zinc continued to rise driven by LME. However, consumption remained weak and China's destocking fell short of expectations, with pressure remaining above. SHFE zinc is expected to hold up well with fluctuations today.

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.