US Dollar Strength Weighs on LME Zinc Trends [SMM Morning Meeting Summary]

Spot Market Fundamentals
Shanghai: In the early trading session, the market quoted spot premiums of 60-110 yuan/mt against the average price, with few follow-up quotations. In the second trading session, ordinary domestic brands were quoted at premiums of 370-420 yuan/mt against the SHFE 2501 contract, while high-end brand Shuangyan had no quotations against the 2501 contract. Toward year-end, some traders cleared inventory with aggressive sales, leading to a continued decline in spot premiums. However, futures prices fluctuated at highs, and some downstream enterprises, closing accounts and taking inventory at year-end, showed low buying sentiment. Spot market transactions showed no improvement.
Tianjin: By midday close, Xinzi was quoted at premiums of 350-390 yuan/mt against the SHFE 01 contract, Chihong at 370-390 yuan/mt, Xikeng at 280-310 yuan/mt, and Bailing had no quotations. High-end brand Zijin was quoted at premiums of 420-450 yuan/mt against the SHFE 01 contract. Futures prices mainly fluctuated within a narrow range. Toward year-end, some traders cleared inventory with aggressive sales, leading to a decline in premiums. Downstream buyers focused on just-in-time restocking and remained cautious about both premiums and futures prices. Overall market transactions were moderate.
Guangdong: In the first trading session, suppliers quoted premiums of 510-535 yuan/mt for brands such as Qilin, Mengzi, and Feilong. As year-end approached, more traders closed accounts, reducing the number of active sellers in the market. In the second session, Qilin and Feilong were quoted at premiums of 525 yuan/mt against the online price. Zinc prices fluctuated at highs, and downstream buyers made just-in-time procurement. With the overnight price spread between futures contracts narrowing, market transactions were moderate, and premiums slightly declined.
Ningbo: In the first trading session, Honglu-V was quoted at a premium of 480 yuan/mt against the SHFE 2501 contract. In the second session, traders maintained quotations at the same level as the previous session. As year-end approached, there were fewer active traders quoting prices, and downstream demand remained weak due to off-season orders. Buying sentiment was similarly low yesterday, and market transactions remained sluggish. Attention is focused on the subsequent arrival of zinc ingots in Ningbo.
Social Inventory: According to the SMM survey, as of Monday, December 30, total zinc ingot inventory across seven regions tracked by SMM stood at 62,500 mt, down 7,600 mt from December 23 and 2,700 mt from December 30. Domestic inventory recorded a decline. Zinc ingot inventories in three regions all decreased, mainly due to the conclusion of year-end long-term contracts and limited arrivals over the weekend. Downstream just-in-time restocking further contributed to the slight decline in inventories across the three regions. Overall, inventories in the three regions fell by 2,400 mt, while inventories across seven regions decreased by 2,700 mt.
Zinc Price Forecast for Today: Overnight, LME zinc recorded a long upper shadow candlestick, with LME inventory down by 6,625 mt to 237,875 mt, a decrease of 2.71%. Market expectations that Trump’s administration would ease regulations, cut taxes, raise tariffs, and tighten immigration policies kept the US dollar index hovering near a two-year high, suppressing LME zinc prices. Supply tightness eased, and domestic consumption seasonally weakened. The market is awaiting guidance from China's manufacturing PMI. Zinc prices are expected to fluctuate today. Overnight, SHFE zinc recorded a small bearish candlestick, with resistance from the 5-day moving average and support from the 10-day moving average. On the fundamentals side, smelters have largely completed winter stockpiling, raw material inventories have increased, and the tight ore supply situation has further improved. Consumption also showed seasonal pullback, with terminal construction gradually wrapping up as the Chinese New Year approaches. Fundamentals provided weaker support for zinc, but warehouse warrants remained low. SHFE zinc is expected to edge down slightly, awaiting more macroeconomic guidance, with prices likely to fluctuate within a narrow range today.