US Dollar Index Rises from Low, LME Zinc Stays High [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes for July 13

Futures: Last Friday, LME zinc opened at $3616.5/mt. After opening, it drifted higher, hitting a high of $3637.5/mt before pulling back all the way. Approaching the night session, LME zinc dipped to a low of $3580/mt. Subsequently, it rebounded from the low to trade near the daily average line, eventually closing down at $3611.5/mt, down $4.5/mt, a decline of 0.12%. Trading volume fell to 12,329 lots, and open interest decreased by 469 lots to 268,000 lots. Last Friday, the most-traded SHFE zinc 2608 contract opened at 24,790 yuan/mt. Initially, it dipped to 24,780 yuan/mt. After opening, it drifted higher, hitting a high of 24,945 yuan/mt, before pulling back to near the daily average line, maintaining a fluctuating trend, and finally closing unchanged at 24,865 yuan/mt. Trading volume fell to 37,825 lots, and open interest decreased by 1,143 lots to 82,938 lots.

Macro: Trump: Iran agreed to a "perfect deal" yesterday but then opened fire; Iran's Revolutionary Guard announced the closure of the Strait of Hormuz; the US military stated that the southern shipping lane of the Strait of Hormuz remains "open"; Iran claims to have destroyed multiple US military facilities in the Middle East; an Israeli source: Trump does not want Israel to enter the war at the moment; Fed's semi-annual report: originally strong inflation accelerated further in spring; prepared to use all available tools to achieve the dual mandate; the State Council issued an approval in principle for the "15th Five-Year Plan for Traditional Chinese Medicine Revitalization and Development"; Ministry of Commerce and General Administration of Customs: impose temporary export ban management on helium; Tencent in talks to acquire Manus? Informed source: Tencent will still retain a minority shareholder position; Zhipu founder Tang Jie sent an internal letter: will launch the Touch High plan, "If we don't reach the top, it's a failure."

Spot Market:

Shanghai: Last Friday, the refined zinc purchase sentiment in the Shanghai region stood at 1.84, and the shipment sentiment at 2.56. During last Friday's mainstream trading session, futures zinc prices rose significantly, with downstream fear of high prices prevalent. Purchase enthusiasm was poor, and spot buying was sluggish. However, certain profit margins existed in the Shanghai trade market for invoices, and traders' quotations were relatively firm, with overall market trading dominated by inter-trader activity.

Guangdong: Last Friday, the refined zinc purchase sentiment in the Guangdong region was 1.88, and shipment sentiment was 2.55. The rising futures suppressed market trading sentiment, and overall transactions were sluggish. Affected by high prices, downstream purchase willingness was low. Most merchants had ample spot and in-factory inventories and no intention to purchase, resulting in a subdued trading atmosphere and declining spot premiums.

Tianjin: Last Friday, the refined zinc purchase sentiment in the Tianjin region was 1.77, and shipment sentiment was 2.51. The futures surged last Friday, and downstream buyers held back due to fear of high prices, with low purchase enthusiasm. Traders' shipment premiums edged down slightly, with trading dominated by inter-trader activity, and overall market transactions were poor.

Ningbo: Last Friday, futures zinc prices rose to near 25,000 yuan/mt. Downstream enterprises were cautious about high prices, leading to fewer inquiries. Moreover, plants that had purchased earlier had some inventory, so spot transactions were sluggish last Friday. Traders sold casually, and spot offers remained basically stable.

Social inventory: On July 9, LME zinc inventory fell by 725 mt to 114,800 mt, a decline of 0.63%. According to SMM's communication, as of July 9, China's inventory decreased slightly.

Zinc price forecast: Last Friday, LME zinc formed a bearish candlestick, with support from the 5-day moving average below. The renewed US-Iran conflict exacerbated market inflation expectations, and the US dollar index rose from lows, putting pressure on non-ferrous metals. However, the continuous destocking of LME zinc inventories provided some support for zinc prices, and LME zinc continued to consolidate at highs. Last Friday, SHFE zinc formed a bullish candlestick, with support from the 5-day moving average below. China's zinc concentrate TCs continued to run at persistently low levels, and the market ore shortage remained unimproved. Meanwhile, zinc ingot inventories also showed no significant destocking. With both bullish and bearish fundamentals, SHFE zinc maintained a consolidation pattern.

Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute investment advice.