U.S.-Iran Negotiations Reached a Stalemate, LME Zinc Center Shifted Downward [SMM Morning Meeting Minutes]

Minutes of the Zinc Morning Meeting on April 28

Futures: Overnight, LME zinc opened at $3,464.5/mt. At the beginning of the session, LME zinc rose along the daily moving average to touch a high of $3,486/mt. During European trading hours, bulls took profits and exited, sending LME zinc lower in a stepwise fashion. It probed a low of $3,389/mt near the session close, ultimately settling down at $3,395/mt, down $67.5/mt or 1.95%. Trading volume increased to 11,170 lots, while open interest decreased by 1,217 lots to 231,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened lower with a gap at 24,285 yuan/mt. SHFE zinc trended downward throughout the session, with its center running below the daily moving average. It probed a low of 23,920 yuan/mt near the session close, ultimately settling down at 23,935 yuan/mt, down 495 yuan/mt or 2.03%. Trading volume decreased to 76,345 lots, while open interest decreased by 1,599 lots to 108,000 lots.

Macro: The White House: Trump discussed Iran's Strait of Hormuz proposal with senior aides. US media: Trump was skeptical of Iran's proposal but did not outright reject it. Trump: maintained contact with both Putin and Zelensky. Hezbollah leader in Lebanon: firmly rejected direct negotiations with Israel. Russian President Putin met with Iranian Foreign Minister Araghchi. National Bureau of Statistics (NBS): From January to March, total profits of China's above-designated-size industrial enterprises reached 1,696.04 billion yuan, up 15.5% YoY. National Energy Administration: will coordinate with the National Development and Reform Commission to scientifically plan the goals and tasks for hydrogen energy industry development during the 15th Five-Year Plan period.

Spot market:

Shanghai: The refined zinc purchase sentiment in the Shanghai region was 1.96, and the shipments sentiment was 2.43. Due to invoice issues at month-end, traders in the Shanghai market had limited shipments. Overall spot premiums showed little change WoW. With futures zinc prices remaining at highs, downstream enterprises were cautious about high prices and made few inquiries yesterday. Spot purchases were basically on an as-needed basis, and overall market trading activity was mediocre.

Guangdong: The refined zinc purchase sentiment in the Guangdong region was 1.68, and the sales sentiment was 2.58. Yesterday, zinc prices fluctuated at highs, and the spot market saw ordinary overall trading. However, invoices were relatively tight in the market recently, with fewer traders making shipments, and spot premiums remained relatively firm.

Tianjin: The refined zinc purchase sentiment in the Tianjin region was 1.63, and the shipments sentiment was 2.21. Yesterday, zinc prices continued to fluctuate at highs. Downstream restocking was limited, mainly driven by rigid demand. Affected by invoice issues, traders had fewer shipments. Spot cargo circulation in the market was low, and traders had a mentality to hold prices firm. Overall market trading was poor.

Ningbo: At month-end, fewer traders were making shipments in the Ningbo market. Overall spot premiums remained firm. Downstream alloy plants made inquiries and purchases based on rigid demand. Trading in the Ningbo market yesterday was slightly sluggish.

Social inventory: On April 27, LME zinc inventory decreased by 1,800 mt to 101,025 mt, down 1.75%. According to SMM communications, as of April 27, China's inventory edged up by 300 mt to 260,200 mt.

Zinc price forecast: Overnight, LME zinc posted a long upper shadow bearish candlestick, with KDJ diverging downward and the 20-day moving average providing support below. US-Iran negotiations reached a deadlock, expectations of escalating conflict rose, base metals came under overall pressure, and bulls mainly reduced positions and exited, pushing the zinc price center lower. Overnight, SHFE zinc posted a bearish candlestick, with the daily candlestick center shifting downward and the Bollinger Bands middle band providing support below. Overnight, non-ferrous metals declined broadly, with zinc prices falling significantly, mainly because on the fundamentals side, social inventory accumulated again to above 260,000 mt, and with the Labour Day holiday approaching, end-user demand was weak and more downstream enterprises went on holiday, resulting in insufficient fundamental support.

Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.