US CPI Data Below Expectations, LME Zinc Rebounds from Low [SMM Zinc Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes for July 15

Overnight, LME zinc opened at $3,565/mt, initially dipped to $3,554/mt, then drifted higher, hitting a high of $3,617.5/mt during the night session, before retreating from highs to below the daily average and finally closing up at $3,579/mt, up $12/mt, or 0.34%. Trading volume decreased to 8,180 lots, and open interest fell by 9,456 lots to 257,000 lots. Overnight, the most-traded SHFE zinc 2609 contract opened at 24,945 yuan/mt, hit a high of 24,950 yuan/mt and a low of 24,865 yuan/mt, and eventually closed up at 24,890 yuan/mt, up 50 yuan/mt, or 0.2%. Trading volume decreased to 23,522 lots, while open interest increased by 1,963 lots to 88,019 lots.

Macro: US monthly CPI recorded a negative reading for the first time in six years. Fed Chairman Warsh: committed to ending the era of high inflation, and will provide ample advance notice if adjusting the balance sheet. The US military confirmed it resumed the maritime blockade of Iran at 4:00 am. US President Trump: only blocking Iranian maritime shipping, with the 20% transit fee the US would charge replaced by trade and investment agreements reached between Gulf states and the US. US media: Trump asks Netanyahu to withdraw troops from Syria and Lebanon. PBOC: will conduct 1,400 billion yuan outright reverse repo operations on July 15, with a tenor of 6 months. General Administration of Customs: since the beginning of this year, China's export growth exceeded 10%, maintaining growth for 11 consecutive quarters. Changxin Technology: issue price of 8.66 yuan per share.

Spot Market:

Shanghai: In Shanghai, procurement sentiment for refined zinc was 1.90, and shipment sentiment was 2.65. Trader offers were firm yesterday, with some suppliers continuing to raise spot quotes. However, during the main trading session yesterday morning, futures zinc prices consolidated, and downstream enterprise orders were poor. Inquiries and purchases remained poor today. Overall spot trades in Shanghai showed no improvement.

Guangdong: In Guangdong, procurement sentiment for refined zinc was 2.00, and sales sentiment was 2.52. The zinc price center pulled back yesterday but continued to consolidate at highs. Some producers were not active in selling due to low premiums. Meanwhile, end-users mostly maintained just-in-time procurement or consumed in-factory inventory. Overall wait-and-see sentiment was quite strong, and purchasing enthusiasm was also low.

Tianjin: In Tianjin, procurement sentiment for refined zinc was 1.78, and shipment sentiment was 2.58. Futures continued to consolidate at highs yesterday. Downstream demand was weak, dominated by just-in-time restocking. Traders maintained stable premiums, with inter-trader transactions dominating. Overall market transactions were poor today.

Ningbo: Offers in Ningbo were basically firm yesterday, with spot premiums remaining stable. Futures zinc prices fluctuated, downstream enterprises were less active in purchasing, and spot procurement was mostly need-based. Overall trades showed no improvement.

Social Inventory: On July 13, LME zinc inventory decreased by 825 mt to 113,450 mt, a decline of 0.72%; according to SMM communication, as of July 13, China’s inventory edged up slightly.

Zinc Price Forecast: Overnight, LME zinc recorded a bullish candlestick, with support from the 10-day moving average below. US CPI data came in below expectations, market expectations for US Fed interest rate hikes diminished, the US dollar index weakened, coupled with continued destocking of LME zinc ingot inventory, LME zinc rebounded from lows and is expected to maintain a fluctuating trend in the short term. Overnight, SHFE zinc recorded a bearish candlestick, with support from the 5-day moving average below. Boosted by the LME trend, SHFE zinc fluctuated at highs in the night session, but on the fundamentals side, off-season consumption persisted, and no significant destocking was seen in China’s zinc ingot inventory, weighing somewhat on zinc prices. SHFE zinc continued to consolidate at highs overall.

Data Source Disclaimer: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM’s internal database models, for reference only and do not constitute any investment advice.