Rate hike expectations resurge, LME zinc falls under pressure [SMM Morning Meeting Summary]

Futures: Overnight LME zinc opened at $3,581.5/mt. In early trading, a tug-of-war between longs and shorts kept LME zinc consolidating at highs, before bulls entered during the European session, lifting LME zinc to a high of $3,600/mt. Subsequently, bears added positions and LME zinc quickly declined to a low of $3,553.5/mt, then consolidated. It finally closed at $3,571/mt, down $8/mt, or 0.22%. Trading volume decreased to 11,201 lots, while open interest increased by 1,200 lots to 271,000 lots. Overnight, the most-traded SHFE zinc 2608 contract opened at 24,700 yuan/mt. Initially, SHFE zinc rapidly declined to a low of 24,645 yuan/mt, before bulls entered, lifting it to a session high of 24,775 yuan/mt. Subsequently, bulls took profits, pushing the price center lower, and it finally closed at 24,695 yuan/mt, down 45 yuan/mt, or 0.18%. Trading volume decreased to 39,292 lots, and open interest decreased by 1,616 lots to 87,863 lots.
Macro: Trump: Working on lifting sanctions on Turkey and will decide on F-35 purchase issue; Trump: Resolving the Russia-Ukraine conflict will be "much faster than people think"; The US revoked a general license that allowed Iranian oil sales; Several areas in southern Iran were attacked again by the US military, which said it launched a series of strikes against Iran; The PBOC increased its gold reserves for the 20th consecutive month.
Spot:
Shanghai: Refined zinc purchase sentiment in Shanghai was 1.96, with sales sentiment at 2.54. The futures price for zinc rose significantly yesterday morning. Downstream enterprises remained cautious about high prices, with overall inquiries and purchases relatively few. Trading in the Shanghai spot market was sluggish. Trader sell-side enthusiasm was similarly poor, with low willingness to further lower spot quotes, keeping overall spot premiums operating at low levels.
Guangdong: Refined zinc purchase sentiment in Guangdong was 1.85, with sales sentiment at 2.6. The price center continued to rise. Market quotes in the morning session changed relatively little compared to the previous day, but actual transactions remained difficult. Downstream inquiries were sluggish and purchase willingness was low. Subsequently, the market slightly lowered premiums to facilitate shipments.
Tianjin: Refined zinc purchase sentiment in Tianjin was 1.81, with sales sentiment at 2.56. Futures continued to rebound yesterday. Downstream users were cautious about purchasing at high prices, with few inquiries. However, with the export window open, traders prepared for exports, leading to higher premiums for export brands. The actual export volume still needs monitoring. Overall market trading was average today, dominated by transactions among traders.
Ningbo: Spot market trading in Ningbo remained very poor yesterday. Market traders were indifferent in their selling and quoting, with spot quotes basically stable from the prior day. Downstream enterprises showed weak off-season consumption demand, with very low overall interest in purchasing and inquiring.
Inventory: LME zinc inventory decreased by 2,075 mt to 116,350 mt on July 7, a decline of 1.75%. According to SMM, as of July 6, total zinc ingot inventory across the seven surveyed SMM markets was 265,800 mt, down 3,500 mt from June 29, but up 900 mt from July 2.
Zinc Price Forecast: Overnight LME zinc recorded a small bearish candlestick. After the US Treasury revoked waivers allowing the sale of Iranian oil, the market worried that high energy prices would prompt the US Fed to raise interest rates, the US dollar strengthened, and LME zinc fell under pressure. It is expected to mainly consolidate today. Overnight SHFE zinc recorded a small bearish candlestick. Macro sentiment turned bearish. The pattern of tight ore supply and loose metal in China remained unchanged, but domestic consumption remained weak. The center of SHFE zinc edged lower, and SHFE zinc is expected to consolidate today.

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