Dollar weakens, LME zinc continues to rise [SMM Morning Meeting Summary]

SMM Zinc Morning Meeting Minutes, September 8

Futures: Overnight, LME zinc opened at $3,948/mt, consolidated briefly in early trading and dipped to a low of $3,933/mt. Subsequently, as bears reduced positions, LME zinc rallied quickly, climbing all the way to a high of $3,998/mt in the night session. Gains narrowed at the end of trading, and it finally closed up at $3,989.5/mt, up $49/mt or 1.24%. Trading volume fell to 11,333 lots, and open interest decreased by 2,585 lots to 262,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened at 267,110 yuan/mt, dipped briefly in early trading to a low of 27,030 yuan/mt, then rallied quickly as bulls added positions, touching a high of 27,385 yuan/mt near the close. It finally settled up at 27,340 yuan/mt, up 245 yuan/mt or 0.90%. Trading volume fell to 71,147 lots, and open interest increased by 5,243 lots to 162,000 lots.

Macro: The Panama Canal warned of possible transit reductions; Ukraine continued attacks on Russian energy facilities; Saudi Aramco's oil facilities were attacked again; Iran unveiled a new-type missile; the PBOC continued to increase its gold holdings in August.

Spot:

Shanghai: Refined zinc purchase sentiment in Shanghai was 1.82, and selling sentiment was 2.54. SHFE zinc futures prices rose again in the morning, intensifying downstream enterprises' fear of high prices. Yesterday, inquiries and purchase willingness were poor, overall market trading was sluggish, and traders offered prices in a laid-back manner. Spot premiums were basically stable MoM.

Guangdong: Refined zinc purchase sentiment in Guangdong was 1.58, and selling sentiment was 2.30. Zinc price centers continued to move higher, and downstream purchasing enthusiasm was poor. Although some delivery brands quoted higher prices due to limited circulating supply, under high zinc prices, there were quotes but no deals in the market, and premiums moved lower.

Tianjin: Refined zinc purchase sentiment in Tianjin was 1.61, and selling sentiment was 2.44. Futures remained at high levels, and most downstream users were still waiting for suitable price points. Yesterday, inquiries were few, traders' selling premiums held steady, and overall market transactions were poor.

Ningbo: Yesterday morning, zinc futures prices rose again above 27,000 yuan/mt. Downstream enterprises, fearing high prices, barely made inquiries or purchases. In addition, end-user orders have not shown a trend of improvement, so wait-and-see sentiment was strong in the market, and overall spot trades were sluggish.

Inventory: On September 7, LME zinc inventory increased by 925 mt to 113,100 mt, up 0.82%. According to SMM communication, as of Monday this week (September 7), total zinc ingot inventory across SMM's seven locations was 222,100 mt, down 28,900 mt from August 31 and down 10,700 mt from September 3. Domestic inventory decreased.

Zinc Price Forecast: Overnight, LME zinc recorded a bullish candlestick. Geopolitical tensions flared up again, and a stronger yen led to a weaker US dollar. Combined with high capital concentration in LME, LME zinc's price center shifted upward. LME zinc is expected to consolidate at highs today. Overnight, SHFE zinc recorded a small bullish candlestick. Domestic inventory continued destocking due to exports, TCs continued to decline, and supply is tight. Meanwhile, the market still holds certain expectations for the September-October peak season, pushing SHFE zinc higher. SHFE zinc is expected to consolidate at highs today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do not constitute decision-making advice.