LME inventory continues to decline, LME zinc center moves higher [SMM Morning Meeting Summary]

Futures: Overnight, LME zinc opened at $3,591.5/mt, hitting a low of $3,591.5/mt right after the open. During the European trading session, bears cut positions, pushing prices up to a high of $3,627.5/mt. Prices then pulled back somewhat, and during the night session consolidated at highs, finally closing up $27.5/mt at $3,615/mt, a gain of 0.77%. Trading volume dropped to 8,356 lots, and open interest decreased by 1,942 lots to 249,000 lots. Overnight, the most-traded SHFE zinc 2609 contract opened at 24,890 yuan/mt. Early in the session, SHFE zinc shot up to hit a high of 24,935 yuan/mt, then bears added positions, sending prices down to a low of 24,790 yuan/mt. Subsequently, bulls added positions, helping prices recover and consolidate near the daily average line. It eventually closed down 20 yuan/mt at 24,865 yuan/mt, a loss of 0.08%. Trading volume fell to 37,107 lots, and open interest increased by 1,847 lots to 113,000 lots.

Macro: The Swiss National Bank may keep interest rates at zero until the end of 2027; Trump: The US should have the lowest interest rates in the world; Trump: I have patience to reach a deal with Iran, otherwise it will be war; Houthi armed forces claim to have struck Saudi crude oil transportation infrastructure; Moonshot AI officially released the Kimi K3 model weights and technical report; China Central Depository & Clearing Co. plans to reduce some of its main business charges.

Spot:

Shanghai: Yesterday, purchasing sentiment for refined zinc in Shanghai was 1.90, and shipment sentiment was 2.59. Yesterday, SHFE zinc futures prices rose on a day-on-day basis, downstream enterprises' fear of high prices persisted, and spot purchases remained need-based, resulting in overall mediocre trading. However, at month-end, traders' offers were firm, and spot premium offers were basically stable WoW.

Guangdong: Yesterday, the zinc price center moved higher compared with last Friday's morning session. Overall market trading was weak, and downstream maintained purchases as needed. Recently, spot availability for some brands has been limited, and traders offered higher prices, but with current futures prices at elevated levels, market trading progress was difficult, and overall demand sentiment was weak.

Tianjin: Yesterday, purchasing sentiment for refined zinc in Tianjin was 1.91, and shipment sentiment was 2.52. Yesterday, futures prices rallied, and end-use consumption remained poor. Downstream users were cautious in purchasing due to fear of high prices. Traders' offered premiums were largely stable, and overall market trading was mediocre.

Ningbo: Downstream enterprises in Ningbo received weak orders during the off-season, and many factories held certain raw material inventories. In addition, as SHFE zinc futures prices rose on a day-on-day basis in the morning, yesterday downstream mostly stayed on the sidelines, and traders offered quotes in a laid-back manner. Overall spot trading was mediocre.

Inventory: On July 27, LME zinc inventory decreased by 2,705 mt to 103,725 mt, down 1.96%. According to SMM, as of July 28, China's inventory decreased by 1,400 mt to 269,000 mt.

Zinc Price Forecast: Overnight LME zinc recorded a bullish candlestick without a lower shadow, with the moving averages below providing technical support. The suspension of mutual attacks between the US and Iran to some extent eased some inflation concerns, LME inventory continued to decline, the B structure outside China continued to widen, and LME zinc rose. Overnight SHFE zinc recorded a small bearish candlestick, with the 10-day and 60-day moving averages below providing support. China inventory edged down but remained at high levels overall, while persistently weak downstream consumption restrained the rise in zinc prices. However, domestic ore TCs hovered at low levels, and SHFE zinc continued to consolidate at highs.

Data Source Statement: All data other than publicly available information are derived from processing by SMM based on public information, market communication, and SMM’s internal database models, and are for reference only, not constituting any decision-making advice.