July 21 Zinc Morning Meeting Minutes
Price Action: Last night, LME zinc opened at $3,530.5/mt, and at the beginning of the session it fluctuated around the daily moving average. During European trading, bulls took profits, pushing LME zinc to a low of $3,503/mt. Subsequently, bears reduced positions, and LME zinc drifted higher to touch a high of $3,553/mt during the night session. Towards the end of the session, its center shifted below the daily moving average, and it eventually settled lower at $3,515/mt, down $13/mt or 0.37%, with trading volume decreasing to 9,689 lots and open interest down 2,313 lots to 252,000 lots. Last night, the most-traded SHFE zinc 2609 contract opened at 24,415 yuan/mt. During the session, SHFE zinc fluctuated around the daily moving average, hitting a low of 24,310 yuan/mt and a high of 24,430 yuan/mt. Towards the end, its center moved below the daily moving average, and it settled lower at 24,350 yuan/mt, down 40 yuan/mt or 0.16%, with volume shrinking to 39,085 lots and open interest rising 1,571 lots to 98,789 lots.
Macro: Iran stated that mediators proposed a 10-day ceasefire between the US and Iran to seek the resumption of the implementation of the memorandum of understanding; Houthi armed forces announced a maritime ban on Saudi Arabia; the US announced an additional 50% tariff on some Canadian products; US media: FBI Director plans to visit Russia; the King of the United Kingdom appointed Burnham as the new Prime Minister; the CSRC held an investor symposium to listen to opinions and suggestions; five major insurance asset managers jointly voiced their firm support for the development of the capital market and their commitment to actively rewarding investors; Ministry of Foreign Affairs: China and the US are maintaining communication on the arrangements for top-level interactions within the year; MIIT will issue guidelines for the construction of the computing power standard system, and promote the establishment of standards such as market-based pricing of computing power.
Spot Market:
Shanghai: Refined zinc buying sentiment in Shanghai was at 2.04, while selling sentiment was at 2.59. Yesterday, SHFE zinc futures prices fell from the prior session. Some downstream buyers had already priced and purchased cargoes as early as last Friday night, while most others continued to expect further price declines. Overall, pricing-based procurement was moderate yesterday. However, traders held their quotes firm, and some suppliers continued to raise spot premiums. Overall trading did not improve significantly.
Guangdong: Buying sentiment for refined zinc in Guangdong was 2.16, and selling sentiment was 2.53. Last Friday night session prices declined, leading to more pricing-based transactions in the market. Yesterday, the futures center held at 24,450 yuan/mt with fluctuations, traders raised their quotes, and there was some just-in-time procurement in the market. However, due to lackluster end-use consumption, market activity showed no notable improvement, and spot premiums only edged up slightly.
Tianjin: Buying sentiment for refined zinc in Tianjin stood at 1.89, while selling sentiment was at 2.58. Yesterday, the futures market pulled back slightly. Downstream users placed many orders but at relatively low prices, resulting in almost no transactions. Suppliers held firm on prices when offering, and premiums edged up slightly. Overall, market transactions were poor yesterday.
Ningbo: Trader offers in the Ningbo market remained firm yesterday, with some downstream enterprises pricing and purchasing. However, amid the off-season consumption, factory order performance was weak, and yesterday's inquiry and purchase enthusiasm was moderate, with spot transactions showing no significant improvement.
Social Inventory: On July 20, LME zinc inventory decreased by 2,575 mt to 109,150 mt, a decline of 2.3%; according to SMM communications, as of July 20, China's inventory increased by 1,300 mt to 269,000 mt.
Zinc Price Forecast: Overnight LME zinc recorded a small bearish candlestick, with the 20-day moving average forming resistance above and the MACD bearish bar expanding. The market weighed hopes for restarting negotiations on the US-Iran conflict, the US dollar fell first then rose, and on the fundamentals side, the export window for domestic zinc ingots was previously opened. Some zinc ingots were exported to Southeast Asia, to some extent impacting the spot market there, spot premiums declined, and the LME zinc center edged lower. Overnight SHFE zinc recorded a fifth consecutive bearish candlestick, with moving averages above forming resistance and the KDJ gap widening downward. Amid the off-season consumption overnight, SMM social inventory increased again by 1,300 mt to 269,000 mt, and in June, net imports of refined zinc were 3,000 mt, putting significant pressure on zinc prices from above.
Data Source Statement: All data other than publicly available information are derived from public information, market communications, and SMM's internal database models, processed by SMM, for reference only and do not constitute decision-making advice.
