Aug 4 SMM Zinc Morning Meeting Minutes
Futures: Overnight, LME zinc opened at $3,645.5/mt. After opening, LME zinc fell first and then rose, hitting a high of $3,703.5/mt during the session, before continuously pulling back from the high. Near the end of the session, LME zinc hit a low of $3,618/mt and finally closed down at $3,634/mt, down $6/mt or 0.16%. Trading volume gained 4,655 lots to 18,193 lots, and open interest decreased 710 lots to 245,000 lots. Overnight, the most-traded SHFE zinc 2609 contract opened at 25,250 yuan/mt. SHFE zinc hit a high of 25,250 yuan/mt at the open, then rapidly consolidated and pulled back, hitting a low of 24,780 yuan/mt during the session. Then SHFE zinc slightly rebounded from the low, before finally closing down at 24,920 yuan/mt, down 460 yuan/mt or 1.81%. Trading volume increased to 125,000 lots, and open interest decreased 8,609 lots to 118,000 lots.
Macro: The U.S. Treasury raised its Q3 borrowing estimate to $739 billion. 25 US states jointly sued the Trump administration over its latest tariff policy. South Korea's central bank planned to purchase domestic refined gold bars for the first time in 13 years. The Fed's No. 3 official expressed optimism that inflationary pressures will gradually ease. Trump said the Strait of Hormuz could reopen by Tuesday Eastern Time at the latest. Iran reportedly refused to fully reopen the Strait of Hormuz before the end of the war. The revised "Regulations on the Protection of Integrated Circuit Layout Designs" were announced. SHFE will launch arbitrage orders from August 24.
Spot Market:
Shanghai: Yesterday, the purchasing sentiment for refined zinc in Shanghai was 1.84, and the selling sentiment was 2.51. SHFE zinc futures continued to rise above 25,000 yuan/mt yesterday. Downstream enterprises were mostly deterred by high prices, with strong wait-and-see sentiment dominating the market, and overall spot trades were dismal. However, traders' quotes were firm, and overall spot premiums were basically flat.
Guangdong: Yesterday, the purchasing sentiment for refined zinc in Guangdong was 1.78, and the sales sentiment was 2.5. The center of futures prices clearly moved up yesterday, with low purchasing activity from downstream players. Market trades were sluggish, spot premiums lacked upward momentum, and were flat compared to last Friday.
Tianjin: Yesterday, the purchasing sentiment for refined zinc in Tianjin was 1.82, and the selling sentiment was 2.33. Futures surged yesterday. Downstream companies were cautious in purchasing amid high prices, with fewer inquiries. Traders were not actively selling, and their selling premiums were largely stable. Overall trades were poor yesterday.
Ningbo: SHFE zinc futures continued to rise yesterday morning. Downstream enterprises were deterred by high prices and basically stayed on the sidelines. Overall spot trades were sluggish, but market traders were unwilling to sell at low prices, so overall spot quotes were firm, with some premium quotes moving up from the previous level.
Social Inventory: On July 31, LME zinc inventory increased by 25 mt to 99,825 mt, up 0.03%. According to SMM, as of August 3, domestic inventory accumulated slightly.
Zinc Price Outlook: Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average below providing support. LME zinc ingot inventory remained low, market supply concerns persisted, bulls continued to drive up zinc prices, and LME zinc rose to a near four-year high. However, overall demand outside China did not show clear improvement, and overall fundamentals-side support was insufficient. Bulls took profits and exited, after which LME zinc pulled back sharply from highs. Overnight, SHFE zinc also recorded a bearish candlestick, breaking through multiple daily moving averages. On the fundamentals side, China's zinc ingot consumption remained weak in the off-season. SMM data on Monday showed zinc ingot inventory continued to accumulate, and the consumption side continued to weigh on zinc prices. Additionally, with some smelters completing maintenance and resuming production in August, domestic refined zinc production is expected to rebound MoM. Affected by the sharp decline in the LME market, SHFE zinc dropped significantly in the night session. It is expected to maintain a consolidation pattern in the short term.
Data Source Disclaimer: All data other than publicly available information is derived from public sources, market communications, and SMM's internal database models, processed by SMM, and provided for reference only, not constituting any investment advice.
![Fundamental support was insufficient, and SHFE zinc pulled back significantly from highs during the night session [SMM Zinc Morning Comment]](https://imgqn.smm.cn/usercenter/Txorc20251217171755.jpg)
