US-Iran Uncertainties Resurface, LME Zinc Falls [SMM Morning Meeting Summary]

Futures: Overnight LME zinc opened at $3,566/mt, initially edging up to a high of $3,584/mt. Subsequently, as bears increased positions, LME zinc drifted lower, hitting a low of $3,512/mt during the night session, before consolidating to eventually close down at $3,528/mt, down $43/mt, or a decline of 1.2%. Trading volume dropped to 11,044 lots, while open interest increased by 1,555 lots to 272,000 lots. The most-traded SHFE zinc 2608 contract opened at 24,540 yuan/mt overnight, initially consolidating and then touching a high of 24,635 yuan/mt. Later, as bulls reduced positions, it fell to a low of 24,465 yuan/mt, before finally closing down at 24,535 yuan/mt, down 130 yuan/mt, or a decline of 0.53%. Trading volume fell to 44,622 lots, and open interest decreased by 3,383 lots to 82,293 lots.
Macro: Trump: The temporary US-Iran ceasefire agreement has ended and there will be no renewed war with Iran. Sources say that if Iran faces any new attack, it will close the Strait of Hormuz. Israeli media: Israel is preparing for a possible resumption of fighting with Iran. US Treasury Secretary Bessent: US oil should possibly be traded at a premium. Fed minutes: Officials were clearly divided on the direction of interest rates, with both rate hikes and cuts possible. The IMF lowered its global growth expectations and raised its growth expectations for China.
Spot:
Shanghai: Refined zinc purchase sentiment in Shanghai was 1.92, while sales sentiment was 2.56. Zinc ingot supply was ample in the Shanghai market. During the daytime session, zinc prices consolidated at highs, but downstream orders were weak in the off-season. Yesterday, inquiries and purchases remained mediocre, spot transactions showed no improvement, and market trading was mainly among traders.
Guangdong: Refined zinc purchase sentiment in Guangdong was 1.85, while sales sentiment was 2.5. Trading was sluggish yesterday, with some traders suspending spot shipments to prioritize long-term contract deliveries. However, due to high prices, end-user purchase willingness remained weak, and spot premiums continued to decline.
Tianjin: Refined zinc purchase sentiment in Tianjin was 1.80, while sales sentiment was 2.57. Futures consolidated at highs yesterday. Downstream users mainly consumed inventory, resulting in limited inquiries. Trading was mainly among traders. Premiums edged down, and overall market transactions were mediocre.
Ningbo: Few traders in Ningbo provided quotes, and overall quotes were basically stable from the previous day. However, orders at zinc alloy plants remained poor. Yesterday, purchase willingness on inquiries was low, with some plants mainly relying on long-term contracts for purchases. Spot transactions showed mediocre performance.
Inventory: On July 8, LME zinc inventory decreased by 425 mt to 115,925 mt, a decline of 0.37%. According to SMM, as of July 6, total zinc ingot inventory across seven major markets in China stood at 265,800 mt, down 3,500 mt from June 29 and up 900 mt from July 2.
Zinc Price Forecast: Overnight, LME zinc recorded a large bearish candlestick. Trump said that the ceasefire with Iran had ended, triggering concerns that a resumption of war could push inflation and interest rates higher again. Macro sentiment weakened, and LME zinc moved lower; today it is expected to mainly consolidate. Overnight, SHFE zinc recorded a small bearish candlestick. Macro sentiment turned bearish. China’s pattern of tight ore supply and loose ingot supply remained unchanged, but domestic consumption has been persistently weak. Under the supply-demand decline pattern, the center of SHFE zinc shifted slightly lower. Today, SHFE zinc is expected to consolidate.

Data Source Statement: Other data, apart from publicly available information, are derived from publicly available information and market communication, processed by SMM based on its internal database models, and are for reference only, not constituting any decision-making advice.