May inflation data largely met expectations, LME zinc maintained a fluctuating trend [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes, June 26

Futures: Overnight, LME zinc opened at $3,420/mt and fluctuated around the daily moving average, with an amplitude of around $50/mt. During the European trading session, it dipped to a low of $3,397/mt and hit a high of $3,448.5/mt, finally closing up at $3,438/mt, up $30/mt, or 0.88%. Trading volume decreased to 12,761 lots, and open interest decreased by 4,826 lots to 261,000 lots. Overnight, the most-traded SHFE zinc 2608 contract opened at 24,030 yuan/mt. After quickly hitting a high of 24,050 yuan/mt at the open, bears added positions, sending SHFE zinc diving to a low of 23,855 yuan/mt. Subsequently, bulls bought the dip, and SHFE zinc drifted higher, finally closing down at 23,980 yuan/mt, down 30 yuan/mt, or 0.12%. Trading volume decreased to 57,261 lots, and open interest increased by 1,471 lots to 109,000 lots.

Macro: Iraq's oil ministry denied considering withdrawing from OPEC. US May PCE data largely met expectations. US Fed's third-in-command expects the 2% inflation target to be delayed until 2028. US media: Iran attacked a cargo ship in the Strait of Hormuz. China's Ministry of Commerce responded to the latest developments in China-US trade consultations.

Spot Market:

Shanghai: The procurement sentiment for refined zinc in Shanghai was 2.48, and the sales sentiment was 2.90. As zinc futures continued to fall below 24,000 yuan/mt, downstream enterprises kept locking in prices on dips. However, having previously bought the dip and thus holding some inventory, spot procurement in the market was limited yesterday. Traders continued to raise spot offers, and zinc ingot premiums edged up.

Guangdong: The procurement sentiment for refined zinc in Guangdong was 2.27, and the sales sentiment was 2.5. Yesterday, the zinc price center continued to move lower, and premiums quoted by traders rose. At the same time, low prices still spurred some end-users to lock in prices on dips. Trading activity picked up from earlier levels, and spot premiums moved higher.

Tianjin: The procurement sentiment for refined zinc in Tianjin was 2.32, and the sales sentiment was 2.73. Yesterday, futures continued to pull back, prompting active price fixing by downstream players. Market trading sentiment improved, but with no immediate cargo pick-up. Traders slightly raised selling premiums, and overall market transactions were better than the previous day.

Ningbo: As zinc futures continued to decline, downstream enterprises kept locking in prices on dips. Market trading atmosphere was favorable, traders actively offered for sales, and spot premiums continued to rise.

Social Inventory: On June 25, LME zinc inventory decreased by 425 mt to 122,400 mt, a decline of 0.35%. According to SMM, as of June 25, domestic inventory increased by 700 mt to 275,900 mt.

Zinc Price Outlook: Overnight, LME zinc recorded a small bullish candlestick, with the lower Bollinger Band overhead forming resistance. The US May PCE data largely met expectations, easing market expectations of further interest rate hikes by the US Fed. LME zinc mainly traded rangebound. Overnight, SHFE zinc recorded a five-day losing streak, with various moving averages above exerting pressure. Overnight, SHFE zinc remained in the doldrums. On the macro front, inflation stayed high. On the fundamentals side, during the consumption off-season, social inventory increased by another 700 mt, the export window closed, and zinc prices encountered resistance.

Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database model. They are for reference only and do not constitute any decision-making advice.