LME Zinc Recorded a Bullish Candlestick, Attention on Macro Changes [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,545/mt. At the beginning of the session, LME zinc moved sideways around the daily moving average, edging down briefly below $3,542.5/mt before rebounding in a volatile manner and strengthening continuously. It touched a high of $3,585/mt near the end of the session, ultimately closing up at $3,582.00/mt, up $38.5/mt or 1.09%. Trading volume increased to 125,000 lots, while open interest decreased by 212 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened higher with a gap at 24,880 yuan/mt. At the beginning of the session, SHFE zinc briefly touched a high of 24,925 yuan/mt before pulling back, dipping to a low of 24,735 yuan/mt during the session. However, bears reducing positions supported SHFE zinc to rebound in a volatile manner and recover part of the losses, ultimately closing up at 24,780 yuan/mt, up 60 yuan/mt or 0.24%. Trading volume decreased to 51,326 lots, while open interest decreased by 967 lots to 105,000 lots.

Macro: Iranian media reported that Iran halted negotiations with the US. Trump stated that all exchanges of fire between Israel and Hezbollah would cease immediately. Iran said the draft agreement proposed by the US did not address the "transfer" or "disposal" of uranium materials. OPEC+ plans to raise its July crude oil production quota by 188,000 barrels per day. Alphabet plans to conduct $80 billion in equity financing, with Berkshire Hathaway investing $10 billion. The State Council publicly released the "Regulations of the State Council on Outbound Investment," effective from July 1. Unitree Robotics passed the IPO review for the STAR Market. Zhipu was recommended for A-share issuance and listing on the STAR Market.

Spot:

Shanghai: Yesterday, the refined zinc procurement sentiment in the Shanghai region was 1.98, and the shipments sentiment was 2.49. In the morning, futures zinc prices edged down MoM, and traders raised spot quotations one after another, pushing spot premiums higher. However, futures prices overall did not fall to the psychological price level of downstream enterprises, and downstream enterprises made few inquiries and purchases. Overall spot market transactions were somewhat sluggish.

Guangdong: Yesterday, the refined zinc procurement sentiment in the Guangdong region was 1.81, and the sales sentiment was 2.46. Yesterday, the zinc price center edged down slightly WoW from Friday, but futures prices remained relatively high. Downstream buyers mostly made just-in-time procurement, and overall market transactions remained relatively mediocre. Trader quotations showed no significant changes, and spot premiums were flat WoW from Friday.

Tianjin: Yesterday, the refined zinc procurement sentiment in the Tianjin region was 1.75, and the shipments sentiment was 2.32. Zinc prices pulled back slightly, and downstream buyers remained mostly on the sidelines. Trader shipment premiums held steady, the market was relatively quiet, and overall market transactions were poor.

Ningbo: The Ningbo market had ample supply. Traders actively offered shipment quotations. In the morning, futures zinc prices declined WoW from Friday, and some downstream alloy plants purchased according to orders. Spot premiums were raised somewhat.

Inventory: On June 1, LME zinc inventory decreased by 500 mt to 113,300 mt, a decline of 0.44%. According to SMM's communication, as of June 1, China's inventory increased by 3,700 mt to 264,600 mt.

Zinc price forecast: Overnight, LME zinc posted a bullish candlestick, with the upper Bollinger Bands rail exerting pressure above and the middle Bollinger Bands rail providing support below. The market was still digesting numerous developments regarding Middle East peace negotiations. Trump indicated that a deal could be reached within the next week, and overall sentiment was relatively positive, pushing the LME zinc center higher. Overnight, SHFE zinc posted a small bearish candlestick, with the upper Bollinger Bands rail exerting pressure above and the 20/60-day moving averages providing support below. Overnight, SHFE zinc opened higher driven by LME, but China's end-use consumption showed clear off-season characteristics with insufficient underlying support, and prices pulled back in a volatile manner. Given the intertwined bullish and bearish fundamentals, SHFE zinc is expected to continue to hold up well.

Data source disclaimer: Data other than publicly available 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.