ADP Data Below Expectations, LME Zinc Maintains Fluctuating Trend [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,542/mt, briefly touched a high of $3,551.5/mt in early trading. It then came under pressure and pulled back, dipping to $3,476/mt during the session. Entering the night session, LME zinc rose above its daily moving average, but lacking upward momentum, it drifted lower and edged down slowly towards the close, finally settling at $3,492/mt, down $59.5/mt or 1.68%. Trading volume fell to 97,682 lots, and open interest increased by 3,263 lots to 266,000 lots. Overnight, the most-traded SHFE zinc 2608 contract opened at 24,400 yuan/mt. In early trading, bears reduced positions, pushing the price up to a high of 24,535 yuan/mt, but subsequently, bears added positions, sending the futures drifting lower to a low of 24,305 yuan/mt. Towards the close, the price edged up slightly and then consolidated, finally settling at 24,375 yuan/mt, down 25 yuan/mt or 0.10%. Trading volume fell to 60,970 lots and open interest decreased by 1,001 lots to 94,484 lots.

Macro: Fed Chairman Warsh: inflation expectations and inflation risks have both declined in recent weeks; US June ADP employment rose less than expected; it is reported that Warsh appointed Bessent's aide as a Fed advisor; Meta is reportedly planning to sell surplus AI computing capacity; Wang Yi had a phone call with US Secretary of State Rubio; agents responded that price hikes by MLCC giant Yageo are true.

Shanghai: Yesterday, the purchasing sentiment for refined zinc in Shanghai was 2.00, and the selling sentiment was 2.53. In the morning, zinc futures prices rose on a daily basis. Downstream enterprises had not yet fully digested previously purchased volumes, and wait-and-see sentiment persisted yesterday. Spot zinc ingot trades were sluggish, and traders' offers were basically stable, with spot premiums little changed.

Guangdong: Yesterday, the purchasing sentiment for refined zinc in Guangdong was 1.94, and the sales sentiment was 2.55. Current futures prices remain high overall. Downstream end-users exhibited strong wait-and-see sentiment, and purchasing demand remained sluggish. There were few inquiries yesterday, and it was difficult for producers and traders to sell. Spot premiums struggled to rise.

Tianjin: Yesterday, the purchasing sentiment for refined zinc in Tianjin was 1.95, and the selling sentiment was 2.59. Futures rebounded yesterday, but downstream enterprises were still slowly picking up previously priced zinc ingots, maintaining a wait-and-see approach with few inquiries. Traders held their selling premiums steady, and overall market trading was average.

Ningbo: Supply of zinc ingot in the Ningbo market was ample. In the morning, zinc futures prices rose on a daily basis. Downstream enterprises continued to adopt a wait-and-see stance, and overall spot trades were sluggish. Traders were in no hurry to sell and kept their offers steady, with spot premiums for zinc ingot basically stable.

Inventory: On July 1, LME inventory decreased by 625 mt to 119,200 mt, down 0.52%. According to SMM communications, as of June 29, China's inventory decreased by 6,600 mt to 269,300 mt.

Zinc Price Forecast: Overnight LME zinc posted a bearish candlestick, with support from the lower Bollinger Band below. US ADP data coming in weaker than expected, combined with Waller’s remarks on cooling inflation, drove the US dollar to pull back. LME zinc initially fell before rebounding, maintaining a fluctuating trend. Overnight SHFE zinc registered a small bearish candlestick, faced with resistance from the 20- and 40-day moving averages above, while the 5-day moving average beneath provided support. End-use consumption was ordinary, spot market trading was sluggish, and the price rise faced some resistance. However, under the tight ore supply situation, support remains at the price bottom.

Data Source Statement: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM’s internal database model, and are provided for reference only. They do not constitute any decision-making advice.