August 19 Zinc Morning Briefing
Futures: Overnight, LME zinc opened at $3,762.5/mt. At the start of trading, LME zinc briefly shot up to a high of $3,767/mt. Entering the European session, bears added positions to pressure prices, and LME zinc drifted lower, with losses gradually widening. During the night session, bears continued to push, and LME zinc accelerated down to an intraday low of $3,689/mt. Prices pulled back slightly at the tail-end of the session, finally closing at $3,695/mt, down $63/mt or 1.68%. Trading volume increased to 13,607 lots, and open interest rose by 2,753 lots to 261,000 lots. Overnight, the SHFE zinc 2610 contract opened at 25,690 yuan/mt. At the start of the session, bulls took profits and exited, causing SHFE zinc to plunge. SHFE zinc then consolidated lower throughout the session to a low of 25,380 yuan/mt. Prices rebounded slightly at the tail-end, finally closing down at 25,425 yuan/mt, down 275 yuan/mt or 1.07%. Trading volume decreased to 88,975 lots, and open interest fell by 3,169 lots to 149,000 lots.
Macro: US media: The US is considering reducing its military presence in the Gulf region after the war ends; Trump: No negotiations with Iran are underway, and the naval blockade remains in place; UAE announces suspension of trade, commercial and financial transactions with Iran; The 10-year US Treasury yield once rose to 4.75%, a new high since January 2025; An extremely strong El Niño event may form this winter, likely to be the strongest on record.
Spot Market:
Shanghai: In Shanghai, the procurement sentiment for refined zinc was 2.00, and the selling sentiment was 2.65. Yesterday, SHFE zinc futures prices fell DoD, and some downstream enterprises made point-price purchases. However, most other downstream enterprises continued to expect further declines, limiting the improvement in overall spot transactions. Trader spot sales remained weak, and spot premiums lacked upward momentum.
Guangdong: In Guangdong, with the contract rollover from 2609 to 2610, zinc prices, though lower, remained at high levels consolidating. Downstream procurement was mainly just-in-time. Affected by low premiums, some traders in the market showed low willingness to sell, providing some support to premiums. However, downstream consumption capped the gains.
Tianjin: In Tianjin, the procurement sentiment for refined zinc was 1.78, and the selling sentiment was 2.54. Zinc prices pulled back slightly but remained at a level relatively acceptable to downstream players. Coupled with still-weak actual consumption, downstream users mainly stayed on the sidelines. Traders’ selling premiums held stable, and overall market transactions were moderate yesterday.
Ningbo: In the morning, SHFE zinc futures prices edged down but did not reach the psychological price levels of downstream buyers. Downstream enterprises continued to expect further declines, and overall transactions did not improve significantly yesterday. Traders passively offered prices, and spot premiums remained stable.
Social Inventory: On August 18, LME zinc inventory decreased by 300 mt to 86,525 mt, down 0.35%. According to SMM communication, as of August 17, China's inventory increased by 5,700 mt to 270,000 mt.
Zinc price forecast: Overnight LME zinc recorded a large bearish candlestick, with daily candlestick center shifting significantly lower，breaking below multiple moving average supports in one move, and the KDJ indicator gap widening downward. Overnight，bears entered the market to drive prices lower, sending LME zinc tumbling all the way. Today marks LME delivery, with attention on the actual volume of delivery to warehouse. Overnight SHFE zinc recorded a bald bearish candlestick, with daily candlestick center shifting lower, while the 20-day moving average below provided support. Amid the off-season for consumption，and with both China and LME recently within their delivery cycles, bullish funds exited to avoid risk, causing zinc prices to retreat from highs. Attention should be paid to inventory changes.
Data source statement: All data other than public information is processed by SMM based on public information, market communication, and SMM's internal database models. It is for reference only and does not constitute any decision-making advice.
