Rate hike expectations pull back, supporting the upward shift of LME zinc's center [SMM Morning Meeting Summary]

Futures: Last Friday, LME zinc opened at $3,471/mt, marking the intraday low, before bulls added positions, driving LME zinc steadily higher to touch an intraday high of $3,549/mt. It eventually closed up at $3,548/mt, gaining $75.5/mt or 2.17%. Trading volume fell to 9,993 lots, while open interest rose by 2,517 lots to 271,000 lots. Last Friday, the most-traded SHFE zinc 2608 contract opened at 24,400 yuan/mt. In early trading, SHFE zinc briefly dipped to a low of 24,340 yuan/mt before bulls added positions, causing SHFE zinc to drift higher and touch an intraday high of 24,495 yuan/mt. It eventually closed up at 24,470 yuan/mt, rising by 175 yuan/mt or 0.72%. Trading volume decreased to 45,864 lots, and open interest increased by 494 lots to 90,804 lots.
Macro: Trump reportedly plans to call Putin after meeting Zelenskyy in Turkey on the 8th; Iran's parliament speaker stated that despite difficulties, reaching an understanding with the US is possible; US media reported that Trump pressured FIFA, and the red card suspension for the US team's top scorer was temporarily postponed; South Korea plans to establish a future fund using tax benefits from the chip industry to invest in economic growth engines and support the younger generation.
Spot:
Shanghai: Refined zinc procurement sentiment in Shanghai was 2.04, and shipment sentiment was 2.57. Last Friday, futures zinc prices were basically stable, and most downstream enterprises remained cautious. Some enterprises had not yet fully consumed their raw material inventory, leading to sluggish spot trades in the overall market, with spot premiums remaining low.
Guangdong: Refined zinc procurement sentiment in Guangdong was 1.92, and sales sentiment was 2.57. After the market opened last Friday, rising prices made transactions difficult. Selling at low prices also failed to boost trading volumes. End-users held certain inventory levels, and market transactions were mostly small-volume purchases for rigid demand, keeping premiums weak.
Tianjin: Refined zinc procurement sentiment in Tianjin was 1.9, and shipment sentiment was 2.55. Last Friday, futures prices rebounded, and downstream users were cautious amid high prices, mainly taking a wait-and-see approach. Traders’ quoting premiums remained stable, and overall market trading was average.
Ningbo: Spot trades in Ningbo were inactive last Friday. Orders from downstream alloy plants were weak during the off-season. Zinc futures consolidated in the morning, and inquiries from downstream enterprises remained limited. Traders' quotes showed some divergence, but overall premiums were basically stable.
Inventory: On July 3, LME zinc inventory decreased by 275 mt to 118,675 mt, down 0.23%. According to SMM communication, as of July 2, total zinc ingot inventory across seven major markets tracked by SMM was 264,900 mt, down 11,100 mt from June 25 and 4,400 mt from June 29.
Zinc Price Outlook: Last Friday, LME zinc formed a bullish candlestick. The weak US employment report cooled market expectations for a near-term US Fed interest rate hike, causing the US dollar to soften. Non-ferrous metals rallied broadly, and the center of LME zinc shifted higher. LME zinc is expected to consolidate today. Last Friday, SHFE zinc recorded a small bullish candlestick. Expectations for overseas interest rate hikes pulled back, while the tight ore supply situation in China persisted, with TCs continuing to fall, providing strong support for zinc prices. Under the influence of LME, the center of SHFE zinc moved higher. SHFE zinc is expected to consolidate today.

Data Source Disclaimer: All data other than publicly available information are 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 decision-making advice.