Geopolitical Developments Disrupted the Market; SHFE and LME Closed Lower for the Week [SMM Market Review - Weekly Price Commentary]

LME zinc: Early in the week, continued overseas destocking supported an upward shift in the price center of LME zinc. Subsequently, geopolitical tensions heightened inflation concerns, and a stronger US dollar put the nonferrous sector under pressure; LME zinc retreated after a rapid rise, with its price center moving lower. Mid-week, signs of easing in the Middle East conflict cooled risk-off sentiment, and the US dollar retreated from highs, lifting broad gains in nonferrous metals. Meanwhile, as the recent Middle East conflict caused more disruptions on the supply side of aluminum, LME aluminum surged sharply, driving zinc prices higher. However, in the latter half of the week, the Middle East conflict escalated, the US dollar strengthened, inflation expectations heated up, and the market lowered expectations for US Fed interest rate cuts within the year, leaving LME zinc under pressure and moving lower. By week’s end, LME zinc rebounded slightly. As of 15:00 this Friday, LME zinc was at $3,250.5/mt, down $57.5/mt, a decline of 1.74%.

SHFE zinc: Early in the week, SHFE zinc rose in tandem, driven by gains in LME. However, according to SMM data, domestic social inventory continued to increase to above 250,000 mt this Monday; coupled with a weaker-than-expected recovery in domestic end-use consumption, the price center of SHFE zinc moved lower. Subsequently, driven by signals of easing in the Middle East conflict and a rally in LME, SHFE zinc rebounded slightly. However, as domestic inventory continued to accumulate and the Middle East conflict escalated again, SHFE zinc and LME zinc fell in tandem. By week’s end, the Government Work Report proposed the 2026 development target, market sentiment improved somewhat, and SHFE zinc rebounded mildly. As of 15:00 this Friday, SHFE zinc was at 24,260 yuan/mt, down 450 yuan/mt, a decline of 1.82%.