Tug-of-War Between Longs and Shorts, Zinc Prices Maintain Range-Bound Trading [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes, May 25

Futures: Last Friday, LME zinc opened at $3,540/mt, quickly dipped to a low of $3,527/mt in early trading before the center shifted up to around $3,560/mt for consolidation. It touched a high of $3,568/mt during European trading hours, then the center moved down continuously, settling around $3,540/mt by the end of the session, ultimately closing up at $3,544.5/mt, up $2/mt, a gain of 0.06%. Trading volume decreased to 8,007 lots, and open interest decreased by 3,369 lots to 232,000 lots. Last Friday, the most-traded SHFE zinc 2607 contract opened at 24,790 yuan/mt, quickly touched a high of 24,855 yuan/mt in early trading before the center shifted below the daily average line, dipping to a low of 24,695 yuan/mt during the session. The center edged up toward the end, ultimately closing down at 24,740 yuan/mt, down 40 yuan/mt, a decline of 0.16%. Trading volume decreased to 42,818 lots, and open interest increased by 3,637 lots to 103,000 lots.

Macro: Trump: US-Iran deal "not fully finalized yet"; White House: Iran peace deal may take several days to reach; Iran stated that at this stage it has not made any commitments on the details of the nuclear issue; Iranian official: management of the Strait of Hormuz will not revert to pre-war status; media reported the next round of US-Iran talks may be held on June 5; Hong Kong and US stock markets are closed on Monday, and gold, silver, and oil trading will end early.

Spot market:

Shanghai: The refined zinc purchase sentiment in Shanghai was 1.92, and the shipments sentiment was 2.49. Zinc futures prices fluctuated at highs during the morning session. Downstream enterprises mostly continued to wait and see, and overall spot trades in the market were sluggish. Shanghai traders offered firm prices, and overall spot premiums remained stable.

Guangdong: The refined zinc purchase sentiment in Guangdong was 1.62, and the sales sentiment was 2.44. Last Friday, futures showed a rising trend, but spot market traders still offered relatively high prices. Current downstream consumption was ordinary, enterprises lacked purchasing momentum, market trading activity was relatively ordinary, and spot premiums edged down.

Tianjin: The refined zinc purchase sentiment in Tianjin was 1.76, and the shipments sentiment was 2.39. Last Friday, zinc prices pulled back slightly. Downstream participants mostly remained on the sidelines. Traders' shipment premiums remained slightly stable, and overall market transactions were poor.

Ningbo: Downstream alloy plants mostly remained on the sidelines. Overall spot transactions were sluggish. Some traders lowered their offers to facilitate shipments, and market spot premiums edged down. Social inventory: On May 22, LME zinc inventory decreased by 225 mt to 111,025 mt, a decline of 0.2%. According to SMM communications, as of April 27, China's inventory decreased by 3,500 mt to 262,500 mt.

Zinc price outlook: Last Friday, LME zinc recorded a small bullish candlestick, with various moving averages below forming support. On the macro front, there are expectations of easing geopolitical conflicts, but inflationary pressure remains significant. The tug-of-war between longs and shorts keeps LME zinc trading within a range. Last Friday, SHFE zinc stopped rising and started to fall, with the KDJ indicator diverging downward. Ore TCs continued to decline, leading to increased profit pressure on smelters. Zinc prices fluctuate at highs, and subsequent attention should be paid to smelter production conditions.

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.