Non-farm payrolls data fell short of expectations, supporting LME zinc's rebound from lows [SMM Morning Meeting Summary]

Market: Overnight, LME zinc opened at $3,487.5/mt, with prices moving sideways around the daily average line during early trade and touching a high of $3,503.5/mt; subsequently, zinc prices gradually pulled back and dipped to a low of $3,432.5/mt, and as European trading began, prices consolidated and recovered, with the center gradually rising back above the daily average line, before edging lower again near the close, finally closing at a decline of $19.5/mt, or 0.56%, at $3,472.5/mt. Trading volume decreased to 79,557 lots, while open interest increased by 2,252 lots to 268,000 lots. The most-traded SHFE zinc 2608 contract opened at 24,130 yuan/mt overnight, initially strengthening amid bearish position covering and touching a high of 24,250 yuan/mt; subsequently, as bulls reduced positions, SHFE zinc pulled back and dipped to a low of 24,105 yuan/mt; later, with bull position additions, SHFE zinc gradually moved above the daily average price line, finally closing up 80 yuan/mt, or 0.33%, at 24,210 yuan/mt. Trading volume decreased to 49,027 lots, and open interest fell by 1,114 lots to 92,556 lots.

Macro: US June non-farm payrolls fell short of market expectations. Trump: Will continue to push for the dismissal of Governor Cook by ‘winning the lawsuit.’ Trump: Micron is red-hot and must lead in the AI field. Sources say the next round of US-Iran talks will be held on July 18. It is reported that OpenAI has offered to provide a 5% equity stake to the Trump administration. Meta: Development of AI agents has not ‘accelerated as expected.’ The China Securities Regulatory Commission has approved the Star Market IPO registration application of Unitree Robotics. Media: Meta's ‘note’ is biased.

Spot:

Shanghai: Yesterday, the purchase sentiment for refined zinc in Shanghai area was 2.08, and the sales sentiment was 2.55. In the morning, zinc futures prices maintained a fluctuating trend, with traders' offers firm, and spot premiums in the market showing little change. Downstream enterprises' purchase willingness remained low yesterday, with actual procurement largely just-in-time, resulting in mediocre overall spot transactions.

Guangdong: Yesterday, the purchase sentiment for refined zinc in Guangdong area was 1.96, and the sales sentiment was 2.57. Zinc prices continued to consolidate at highs yesterday, downstream procurement willingness was weak, and end-user inventories were relatively ample, leading to insufficient restocking demand, with most procurement being just-in-time. The overall trading atmosphere was sluggish, and spot premiums declined.

Tianjin: Yesterday, the purchase sentiment for refined zinc in Tianjin area was 1.91, and the sales sentiment was 2.56. Futures mainly consolidated yesterday, but downstream consumption was weak. Previously priced cargoes were still being picked up, leading to a wait-and-see attitude with fewer inquiries. Traders' spot premium offers held steady, and overall market transactions were mediocre.

Ningbo: Yesterday, overall trading in Ningbo market remained mediocre. Some downstream enterprises had not yet fully digested their earlier low-price zinc ingot purchases, and with poor downstream orders in the off-season, overall zinc ingot demand was moderate. Traders made laid-back shipment offers, and spot premiums held steady at low levels.

Inventory: On July 2, LME inventory decreased by 250 mt to 118,950 mt, a decline of 0.21%. According to SMM's communication, as of July 2, China's inventory decreased by 4,400 mt to 264,900 mt.

Zinc Price Outlook: Overnight LME zinc formed a bearish candlestick with a long lower shadow, with the 20-day and 40-day moving averages above exerting resistance and the lower Bollinger Band below providing support. US June nonfarm payroll additions were far below expectations, the market adjusted expectations for US Fed policy, the US dollar index fell, and LME zinc rebounded from intraday lows. Overnight SHFE zinc formed a small bullish candlestick, with various moving averages above exerting resistance and the lower Bollinger Band below providing support. End-use consumption was sluggish; although China's inventory continued to decline, it remained at a high level overall, while TCs remained low, keeping SHFE zinc in a consolidation pattern.

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