SMM Zinc Morning Meeting Minutes, October 12
Futures: Last Friday, LME zinc opened at $3,710/mt and rose steadily throughout the session, dipping to an intraday low of $3,710/mt in early trading before climbing to a high of $3,811.5/mt near the close, ultimately settling up $91.5/mt, or 2.47%, at $3,801.5/mt. Trading volume fell to 13,406 lots, while open interest decreased by 2,778 lots to 255,000 lots. Last Friday, the most-traded SHFE zinc 2611 contract opened at 26,080 yuan/mt and consolidated at highs throughout the session, dipping to an intraday low of 26,040 yuan/mt in early trading before climbing to a high of 26,215 yuan/mt near the close, ultimately settling up 280 yuan/mt, or 1.08%, at 26,210 yuan/mt. Trading volume fell to 50,372 lots, while open interest decreased by 1,658 lots to 106,000 lots.
Macro: Iran: The US has accepted some of the conditions proposed by Iran for reopening the Strait of Hormuz, but responses to other conditions remain inadequate; Iran's Revolutionary Guard: Vessels that disable their navigation identification systems in the Strait of Hormuz will be treated as hostile targets; Israeli media reported that US and Israeli leaders have discussed striking Iran again, and Netanyahu has no intention of acting before the month-end parliamentary elections; Houthi forces claimed responsibility for four rounds of attacks on Saudi Arabia, targeting airports and energy facilities; Saudi Civil Aviation Authority: Riyadh's King Khalid International Airport was attacked last Saturday, leaving 12 dead and 309 injured; Trump: Russia and Ukraine have agreed to implement an "energy ceasefire"; Zelensky claimed to be unaware, then later announced support; the US Treasury Department eased sanctions on Russia, allowing imports of Russian diesel until next April, drawing condemnation from Zelensky; the Ministry of Finance arranged to use 550 billion yuan of local government debt carryover quota; Joint statement from the second meeting of the China-EU trade and investment consultation mechanism: China and the EU reached an understanding on hybrid vehicle trade in a manner consistent with WTO rules; the China Securities Regulatory Commission held an expert symposium on capital markets and the financial situation.
Spot market:
Shanghai: Last Friday, purchase willingness for refined zinc in Shanghai was 2.14, while selling sentiment was 2.56. Last Thursday evening, zinc prices on the futures market fell significantly, reaching downstream enterprises' psychological price levels. Downstream enterprises began actively pricing and purchasing on dips starting Thursday evening, while traders in the market continued to raise spot quotes, with overall premiums rising further MoM.
Guangdong: Last Friday, purchase willingness for refined zinc in Guangdong was 1.95, while selling sentiment was 2.65. The pullback in futures prices prompted moderate restocking by downstream buyers in Guangdong, though some end-users showed weak purchasing interest and continued to digest inventories. Most traders kept their offers unchanged from last Thursday, with a small number raising premiums. Combined with continued downstream purchasing last Friday, this pushed Guangdong premiums slightly higher.
Tianjin: Last Friday, the purchasing sentiment for refined zinc in the Tianjin area was 1.89, while the selling sentiment was 2.37. Futures continued to pull back, but most downstream enterprises had already priced their orders the previous night, and with existing inventory still on hand, cargo pick-up was limited. Last Friday, as futures rose, downstream pricing activity was low, and traders took the opportunity to raise spot premiums amid increased selling, resulting in overall mediocre market transactions.
Ningbo: Last Thursday night, zinc prices on the futures market declined significantly, prompting downstream enterprises to actively price orders at lower levels. Last Friday, some traders in the market continued to raise their quotes, but as zinc prices on the futures market also rebounded slightly in the morning session, wait-and-see sentiment re-emerged among some downstream buyers, limiting the increase in spot premiums.
Social inventory: On October 9, LME zinc inventory decreased by 575 mt to 126,850 mt, a decline of 0.45%; according to SMM communication, as of October 8, domestic inventory accumulated.
Zinc price forecast: Last Friday, LME zinc recorded a bullish candlestick, with the lower Bollinger Band providing support. LME inventory maintained a fluctuating trend, and the 0-3 backwardation structure widened slightly again from its low, offering some support to zinc prices. Bears reduced positions, and LME zinc rebounded notably from its low, with short-term consolidation expected. Last Friday, SHFE zinc recorded a bullish candlestick, with the 5-day moving average below providing support. Driven by the rebound in LME, SHFE zinc opened higher with a gap in the night session. On the fundamentals side, smelters' production enthusiasm was relatively poor due to profit concerns, while downstream consumption remained mediocre. With bulls and bears continuing to battle, prices are expected to consolidate.
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.
