LME Zinc Center Shifts Down amid Expectations for US Fed Interest Rate Hikes [SMM Morning Meeting Minutes]

Zinc Morning Briefing for June 24

Futures: Overnight, LME zinc opened at $3,599/mt. After briefly consolidating near the daily moving average in early trading, bears added positions and weighed on prices, sending LME zinc oscillating downward. Approaching the night session, the price center shifted down to near $3,490/mt, then edged slightly higher at the tail before finally closing down at $3,501.5/mt, down $100.5/mt, or 2.79%. Trading volume increased to 19,100 lots, and open interest rose by 5,090 lots to 266,000 lots. Overnight, the most-traded SHFE zinc 2608 contract opened lower with a gap at 24,385 yuan/mt. SHFE zinc traded in the doldrums near the daily moving average during the session, touching a high of 24,450 yuan/mt early on and a low of 24,290 yuan/mt, before finally closing down at 24,370 yuan/mt, down 395 yuan/mt, or 1.59%. Trading volume decreased to 61,497 lots, and open interest rose by 861 lots to 102,000 lots.

Macro: Meloni may call an early election as soon as next April; Putin: Russia is willing to negotiate with Ukraine based on the Istanbul agreements and others; Trump: Iran has fully agreed to accept long-term nuclear inspections; Oman and Iran will coordinate future navigation management in the Strait of Hormuz.

Spot Market:

Shanghai: Refined zinc purchase sentiment in Shanghai stood at 1.92, selling sentiment at 2.59. In the morning session, zinc futures fluctuated. Shanghai market traders offered cargoes in a relaxed manner, with overall spot offers changing little. Downstream enterprises remained on the sidelines, and yesterday their inquiries and purchase willingness were weak. Overall spot trading was relatively poor.

Guangdong: Zinc prices continued to hover at highs, overall market demand was weak, and end-use consumption entered the traditional off-season. Spot trading was sluggish, traders found it difficult to sell, and spot premiums moved lower.

Tianjin: Refined zinc purchase sentiment in Tianjin stood at 1.9, selling sentiment at 2.48. Yesterday futures mainly fluctuated, but consumption continued to weaken. Downstream players mainly restocked for rigid demand, and traders’ spot premiums edged down when selling, resulting in average overall market trading.

Ningbo: Ningbo market had a surplus of zinc ingots, with traders focusing on selling. During the off-season, downstream alloy plants received relatively weak orders, and previous inventories had not yet been digested. Spot trades were sluggish yesterday. Some traders proactively lowered their spot offers to sell, and market premiums edged down.

Social Inventory: On June 23, LME zinc inventory fell by 300 mt to 123,150 mt, a decline of 0.24%. According to SMM, as of June 22, China’s zinc inventory increased by 7,200 mt to 275,200 mt.

Zinc Price Forecast: Overnight, LME zinc formed a large bearish candlestick, with support from the lower Bollinger Band below. Expectations for US Fed interest rate hikes increased, nonferrous metals and global stock markets fell, the US dollar stayed firm, and LME zinc fell in tandem. Focus on the support at $3,440/mt below. Overnight, SHFE zinc recorded a four-day losing streak, with the daily candlestick center moving lower and the MACD bearish candlestick expanding. Overnight, influenced by macro rate hike expectations, the SHFE zinc center moved lower, but with the SHFE/LME zinc price ratio remaining weak, the zinc ingot export window is about to open, so monitor the subsequent actual export volumes.

Data Source Statement: Except for publicly available information, all other data is processed and derived by SMM based on public information, market communication, and the SMM internal database model. It is for reference only and does not constitute any decision-making recommendation.