Non-farm payrolls data missed expectations, LME zinc center shifted lower [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, August 7

Futures: Last Friday, LME zinc opened at $3,764/mt. In early trading, LME zinc briefly rose to a high of $3,798/mt, then bears added positions, and LME zinc drifted lower throughout the session, hitting a low of $3,697/mt near the close. It eventually settled down at $3,698/mt, down $71.5/mt or 1.9%. Trading volume fell to 14,673 lots, while open interest increased by 5,089 lots to 254,000 lots. Last Friday, the most-traded SHFE zinc 2609 contract opened at 25,705 yuan/mt. Early in the session, it briefly rose to a high of 25,730 yuan/mt, then bulls reduced positions, and the contract declined to a low of 25,485 yuan/mt near the close. It eventually settled down at 25,505 yuan/mt, down 440 yuan/mt or 1.7%. Trading volume decreased to 88,818 lots, and open interest fell by 5,768 lots to 125,000 lots.
Macro: US media: Trump postponed military action against Iran, saying he is "handling the Iran issue quietly"; US media: Trump pushes to remove Fed Governor Cook; Musk may adopt FEL technology to challenge EUV lithography; US seasonally adjusted non-farm payrolls unexpectedly fell by 23,000 in July; National Bureau of Statistics (NBS): CPI rose 0.5% YoY in July; PBOC increased gold holdings for the 21st consecutive month.
Spot:
Shanghai: Refined zinc purchasing sentiment in Shanghai was 1.72 and sales sentiment was 2.52. Last Friday, SHFE zinc futures prices rose on a daily basis to around 26,000 yuan/mt. Downstream enterprises showed strong fear of high prices. As of last Friday, they remained on the sidelines with almost no inquiries, and overall spot trades were sluggish. Traders offered casually, and overall premiums changed little from the previous day.
Guangdong: Refined zinc purchasing sentiment in Guangdong was 1.7 and sales sentiment was 2.65. Zinc prices continued to rise, putting significant procurement pressure on downstream users. The trading atmosphere was muted. End-users with procurement needs mostly made just-in-time procurement. Spot premiums were pressured lower by high prices last Friday.
Tianjin: Refined zinc purchasing sentiment in Tianjin was 1.72 and sales sentiment was 2.40. The futures market continued to rally. With prices excessively high, downstream users did not inquire or place orders. Traders casually shipped out cargoes, and premiums remained largely stable. Overall market trading was poor last Friday.
Ningbo: Last Friday morning, SHFE zinc futures prices rose significantly. Downstream enterprises mostly waited to see the subsequent trend, with almost no inquiries or procurement. Traders offered and sold casually, and overall market trading was sluggish.
Inventory: On August 7, LME zinc inventory fell 400 mt to 97,075 mt, a decline of 0.41%. According to SMM communication, as of this Thursday (August 6), the total zinc ingot inventory across seven regions was 271,700 mt, up 3,000 mt from July 30, but down 800 mt from August 3, indicating a decrease in domestic inventory.
Zinc Price Forecast: Last Friday, LME zinc recorded a large bearish candlestick. Geopolitical tensions eased, and non-farm payrolls data unexpectedly turned negative, dampening market expectations of a near-term rate hike by the US Fed. Macro sentiment turned positive, but LME inventory remained low throughout, and funds took profits and exited, sending LME zinc lower. LME zinc is expected to mainly consolidate at highs today. Last Friday, SHFE zinc recorded a small bearish candlestick. Under the influence of the LME, the SHFE zinc price center moved lower, and China’s consumption remained weak throughout. However, zinc concentrate TCs remained at low levels, providing support to SHFE zinc. SHFE zinc is expected to consolidate at highs today.

Data Source Statement: Other data, excluding publicly available information, are derived based on publicly available information, market communication, and SMM’s internal database models, processed by SMM, and are for reference only. They do not constitute any decision-making advice.