US-Iran tensions spark market concerns, LME zinc dives [SMM Morning Briefing]

Futures: Overnight, LME zinc opened at $3,549/mt, briefly rising to touch a high of $3,520.5/mt in early trading, before bears added positions, sending LME zinc down to a low of $3,465.5/mt late in the session, eventually closing down at $3,468.5/mt, a decrease of $77.5/mt, or 2.19%. Trading volume increased to 17,248 lots, and open interest rose by 568 lots to 234,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,480 yuan/mt, briefly climbing to a high of 24,580 yuan/mt in early trading, before bulls reduced positions, with the contract fluctuating downward to a low of 24,190 yuan/mt late in the session, finally closing down at 24,280 yuan/mt, down 340 yuan/mt, or 1.38%. Trading volume decreased to 93,109 lots, and open interest fell by 678 lots to 85,923 lots.
Macro: The US military confirmed it struck Iran for the second consecutive day; Trump: The deal has been negotiated, and now only needs Iran’s signature on the document, with a few more days given for consideration; US media reported that two additional demands made by Trump led to the deal’s delay; The US May CPI increase hit a 3-year high, with Trump commenting: I love inflation; Bank of Japan Governor Kazuo Ueda will miss next week’s rate decision due to hospitalization; The National Bureau of Statistics: May consumer prices rose 1.2% YoY; Hong Kong’s Securities and Futures Commission: Hong Kong licensed companies can continue to serve existing mainland clients, but cannot provide services within mainland China.
Spot:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.04, while sales sentiment was 2.58. Futures prices maintained a fluctuating trend, and zinc downstream enterprise orders weakened during the off-season. Yesterday, inquiries and purchase willingness were poor, spot zinc ingot trading in the Shanghai market was lackluster, and traders offered laid-back selling quotes. Overall spot premiums remained stable from the previous day.
Guangdong: Refined zinc purchase sentiment in Guangdong was 1.86, and sales sentiment was 2.47. Yesterday, the zinc price center stayed high and fluctuated; although there was a slight downward trend, the change was relatively small on a MoM basis, with downstream mostly making just-in-time procurement. Recent arrivals in the market have been relatively few, providing some support for premiums.
Tianjin: Refined zinc purchase sentiment in Tianjin was 1.81, and sales sentiment was 2.47. Zinc prices mainly fluctuated, and downstream users still held a wait-and-see stance, with low purchase sentiment. Amid poor transaction, traders’ selling premiums remained stable, and overall market transactions were mediocre.
Ningbo: Market traders offered laid-back selling quotes. Yesterday, there was some divergence in overall premium quotes, but futures zinc prices maintained a fluctuating trend. Downstream zinc alloy plants continued to stay on the sidelines, leading to muted spot market transactions.
Inventory: On June 10, LME zinc inventory decreased by 825 mt to 109,575 mt, down 0.75%. According to SMM communication, as of June 8, China’s inventory increased by 1,600 mt to 265,700 mt.
Zinc Price Forecast: Overnight, LME zinc formed a large bearish candlestick, Trump announced the resumption of "fierce strikes" on Iran, sparking market concerns over subsequent economic impacts, the US dollar rebounded strongly, LME zinc fell under pressure, and it is expected to trade mainly in the doldrums today. Overnight, SHFE zinc formed a large bearish candlestick, geopolitical turmoil sparked market concerns over subsequent economic impacts, while domestic consumption in China remained weak, SHFE zinc closed lower, dragged down by the LME, and it is expected to fluctuate today.

Data Source Disclaimer: All data other than publicly available information are derived from public information, market communication, and SMM's internal database models, processed by SMM, for reference only and do not constitute any decision-making advice.