Domestic PMI Data Returns to Expansion Territory, SHFE Zinc Moves Up [SMM Zinc Morning Comment]

Overnight, Trump announced that reciprocal tariffs would be implemented starting April 2, while a 25% tariff on Canada and Mexico would take effect on March 4. Trump hinted that President Zelensky's position might be at risk, stating that information on a mining agreement would be provided on Tuesday. The White House revealed that Trump would discuss an economic agenda, including tax cuts, on Wednesday. The Atlanta Fed's GDPNow model projected that US Q1 GDP growth this year would be -2.8%. OPEC+ unexpectedly announced plans to proceed with production increases in April. In February, the Caixin China Manufacturing PMI reached a three-month high. Liu Jieyi stated that China's economic fundamentals remain stable, with numerous advantages, strong resilience, and significant potential, and that the long-term positive conditions and basic trends have not changed. Regarding China's potential countermeasures against another US tariff hike, the Ministry of Foreign Affairs responded that necessary measures would be taken to safeguard legitimate interests.

Overnight, LME zinc opened at $2,810/mt. At the beginning of the session, LME zinc briefly dipped below $2,807.5/mt. Subsequently, shorts reduced positions, and LME zinc climbed upward, with its center shifting to around $2,835/mt for consolidation. During European trading hours, LME zinc quickly pulled back, but further short covering drove it higher, reaching a night session peak of $2,860/mt. Later, the center gradually retreated to near the daily average line, closing up at $2,838/mt, an increase of $40/mt or 1.43%. Trading volume decreased to 11,197 lots, and open interest fell by 2,288 lots to 223,000 lots. Overnight, LME zinc recorded a long bullish candlestick, with support from the 5-day moving average below and resistance from the 10-day moving average above. US economic data showed mediocre performance, the US dollar weakened, and base metals broadly rose. Continued destocking of LME zinc inventories supported zinc prices. China's Manufacturing PMI returned to the expansion territory, and consumption expectations improved. LME zinc's center is expected to continue fluctuating upward.

Overnight, the most-traded SHFE zinc 2504 contract opened at 23,750 yuan/mt. At the beginning of the session, shorts reduced positions, and SHFE zinc fluctuated upward, peaking at 23,860 yuan/mt. Subsequently, longs reduced positions, and SHFE zinc fluctuated downward to below the daily average line. Later, shorts took profits and exited, causing SHFE zinc's center to shift upward, ultimately closing up at 23,820 yuan/mt, an increase of 90 yuan/mt or 0.38%. Trading volume decreased to 58,989 lots, and open interest fell by 2,227 lots to 85,458 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with support from the 5-day moving average below. Macro sentiment improved, and China's Manufacturing PMI reached a three-month high. From a fundamental perspective, social inventories declined, and downstream consumption improved. During the Two Sessions, the market anticipates favorable domestic policies, and zinc prices are expected to fluctuate upward.