LME Structure Pulls Back in Stages, LME Zinc Center Edges Lower [SMM Morning Meeting Summary]

Zinc Morning Meeting Minutes for September 23

Futures:

Overnight, LME zinc opened at $3,930.0/mt. At the beginning of the session, LME zinc drifted lower. Approaching the European trading hours, LME zinc fell sharply before bulls added positions, driving LME zinc sharply higher to an intraday high of $3,960.5/mt. During the night session, bears added positions to pressure prices, and LME zinc gave back most of its gains, dipping to $3,898/mt near the close. It ultimately closed down at $3,911.5/mt, down $14.0/mt, or 0.36%. Trading volume decreased to 10,878 lots, while open interest increased by 372 lots to 263,000 lots. Overnight, the most-traded SHFE zinc 2611 contract opened at 26,735 yuan/mt. At the beginning of the session, bulls added positions to push SHFE zinc briefly higher, touching a high of 26,820 yuan/mt. Subsequently, bears added positions to pressure prices, and the contract pulled back under pressure, dipping to 26,665 yuan/mt during the night session. Near the close, bulls added positions to drive a slight rebound, and it ultimately closed up at 26,710 yuan/mt, up 130 yuan/mt, or 0.49%. Trading volume decreased to 49,203 lots, while open interest increased by 2,043 lots to 144,000 lots.

Macro:

Trump said US officials held a three-hour meeting with Iran and another meeting will be arranged soon. Iran confirmed the meeting with the US side and put forward conditions for reopening the strait. Trump said Putin is "willing to meet," but it is uncertain whether he will attend the G20 summit. Trump said he has urged approval of a diesel export ban. The National Development and Reform Commission (NDRC) said it will promote the BeiDou industry to exceed 1 trillion yuan in scale within five years.

Spot market:

Shanghai: In the Shanghai region, refined zinc purchase willingness was 2.08, and selling willingness was 2.60. In the morning session, zinc futures consolidated at highs. Downstream purchasing enthusiasm remained generally mediocre, and overall transactions yesterday showed no improvement. Trader spot quotes were basically flat compared with the previous day, and overall trading was mostly between traders.

Guangdong: In the Guangdong region, refined zinc purchase willingness was 1.85, and selling willingness was 2.69. Recently, more traders have been selling in the market, and the circulation of warrants has increased. At the same time, market quotes remained relatively firm, but futures remained high. Under high prices, downstream purchasing enthusiasm was weak, and spot market transactions were ordinary.

Tianjin: In the Tianjin region, refined zinc purchase willingness was 1.81, and selling willingness was 2.36. Futures consolidated at highs. Downstream buyers had basically completed stockpiling in the earlier period, so inquiries and purchases were relatively few. Traders still held prices firm when selling, and premiums edged up. Trading among traders was active, while overall market transactions were average.

Ningbo: In the Ningbo market yesterday, trader quotes changed little from the previous day. Most traders sold in a laid-back manner. Zinc futures consolidated, downstream plants showed mediocre purchase willingness, and overall spot trades were mediocre.

Social inventory: On September 21, LME zinc inventory fell by 2,125 mt to 114,725 mt, a decline of 1.82%; according to SMM communication, as of September 21, China's inventory increased by 2,100 mt to 215,600 mt.

Zinc price forecast: Overnight, LME zinc recorded a small bearish candlestick with a long upper shadow, with the daily candlestick center slightly lower, but the MACD bearish candlestick narrowed, and the moving averages below provided support. Overnight, although there were positive expectations on the macro front, the stronger US dollar pressured zinc prices, and zinc prices maintained range-bound movement, with attention on macro developments. Overnight, SHFE zinc recorded a small bearish candlestick, with the daily candlestick center slightly higher, and the middle Bollinger Band below provided support. Recently, zinc fundamentals have not changed significantly, TCs are low, and downstream purchases at high zinc prices are mainly just-in-time procurement, with a tug-of-war between longs and shorts, and zinc prices mainly consolidate within a range, following macro sentiment changes.

Data source statement: Except for public 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, not constituting decision-making advice.