Macro Sentiment Weakens, Zinc Prices Decline All the Way [SMM Morning Meeting Summary]

 Spot Fundamentals

Shanghai: In the early trading session, the market quoted spot premiums of 160-200 yuan/mt against the average price, with few follow-up quotations. In the second trading session, ordinary domestic brands were quoted at premiums of 510-550 yuan/mt against the SHFE 2501 contract, while high-end brands like Shuangyan were quoted at premiums of 800-820 yuan/mt against the SHFE 2501 contract. Yesterday, there were still few quotations from traders in the Shanghai market. With tight supply, spot premiums remained firm. The futures market declined compared to the previous day, prompting some downstream buyers to restock at lower prices. However, other enterprises, expecting further price drops, showed limited interest in inquiries. Overall, spot transactions were mainly concentrated among traders.

Guangdong: In the first trading session, suppliers quoted premiums of 595-615 yuan/mt for Qilin, Mengzi, and Danxia brands. With the futures market declining, downstream buyers restocked at lower prices. In the second session, Qilin was quoted at a premium of 605 yuan/mt against the online price. Overall, transactions improved yesterday as downstream restocking enthusiasm increased. However, spot supply in the market remained limited, and the price spread between futures contracts widened, leading to a slight increase in premiums.

Tianjin: By midday close, Xinzi had no quotations against the 01 contract, Chihong was quoted at premiums of 510-530 yuan/mt against the 01 contract, Xikang at premiums of 470-500 yuan/mt, and Bailing had no quotations. High-end brands like Zijin were quoted at premiums of 550-600 yuan/mt against the 01 contract. The futures market continued to pull back yesterday. As the year-end closing period approached, downstream point-price purchases increased. Coupled with limited market supply, traders maintained firm premiums and discounts. Overall, market transactions were moderate.

Ningbo: In the first trading session, Yongchang was quoted at a premium of 430 yuan/mt against the SHFE 2501 contract. In the second session, traders maintained quotations at the same level as the previous session. Yesterday, there were almost no quotations from traders in the Ningbo market. Year-end spot shortages persisted, and some downstream buyers had previously purchased domestic or imported zinc ingots, maintaining certain inventory levels. Overall, market activity remained sluggish with no improvement.

Inventory: According to the SMM survey, as of December 19, total zinc ingot inventory across seven regions tracked by SMM stood at 82,200 mt, down by 9,200 mt from December 12 and by 7,200 mt from December 16, indicating a decline in domestic inventory. In Shanghai, inventory decreased as warehouse arrivals remained low throughout the week, while downstream restocking and purchasing activities continued, leading to further inventory declines. In Tianjin, inventory also fell due to ongoing transportation disruptions and limited warehouse arrivals. In Guangdong, inventory recorded a slight decrease as normal warehouse arrivals were offset by continuous declines in the futures market, prompting some downstream buyers to purchase at lower prices. Overall, inventories in the three major regions decreased by 6,800 mt, while total inventory across seven regions dropped by 7,200 mt.

Zinc Price Forecast for Today: Overnight, LME zinc recorded a four-day losing streak, with the daily candlestick center shifting downward. LME inventory decreased by 2,875 mt to 257,525 mt, a drop of 1.1%, reflecting a decline in LME inventory. US initial jobless claims fell more than expected, reinforcing cautious expectations for future interest rate cuts. The US dollar index surged to a two-year high, leading to a collective pullback in base metals, with LME zinc's center moving downward. SHFE zinc recorded a five-day losing streak overnight, with resistance forming at the 40-day moving average and the KDJ indicator expanding downward. Despite a decline in social inventory overnight, weak macro sentiment weighed on zinc prices.