Inventories Outside China Increased, LME Zinc Recorded a Small Bearish Candlestick [SMM Morning Meeting Summary]

Futures: Overnight, LME zinc opened at $3,556.5/mt. Early in the session, LME zinc fluctuated upward to a high of $3,585/mt. As European trading began, bears increased positions and prices pulled back continuously from highs, probing a low of $3,531.5/mt near the end of the session, ultimately closing lower at $3,543.5/mt, down $15.25/mt or 0.43%. Trading volume increased to 108,000 lots, and open interest increased by 2,300 lots to 230,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened lower with a gap at 24,880 yuan/mt. Early in the session, SHFE zinc briefly touched a high of 24,885 yuan/mt before bulls reduced positions and prices quickly declined, probing a low of 24,630 yuan/mt near the end of the session, ultimately closing lower at 24,665 yuan/mt, down 300 yuan/mt or 1.20%. Trading volume fell to 67,517 lots, and open interest decreased slightly by 128 lots to 109,000 lots.

Macro: US media: Trump tightened terms of the Iran deal, with revised proposals involving nuclear access and strait issues. Sources said Iran may propose new revisions to the memorandum of understanding text. The Iranian presidential office again denied rumors of Pezeshkian's resignation. Kazakhstan was reportedly willing to receive Iranian enriched uranium, contingent on a US-Iran deal. Kashkari: It is too early to conclude that an immediate rate hike is needed. The EU was reportedly considering suspending the dynamic adjustment of the Russian oil price cap. Qiushi magazine published an important article by Xi Jinping titled "Forward-Looking Planning and Development of Future Industries." NBS: The manufacturing PMI in May was 50.0%, down 0.3 percentage points MoM. According to media reports, some banks in Hong Kong were tightening investment account openings, with no impact on savings accounts for now.

Spot:

Shanghai: Last Friday, the purchasing sentiment for refined zinc in the Shanghai region was 1.92, and the willingness-to-sell sentiment was 2.59. In the morning, futures zinc prices moved higher MoM, and some downstream buyers had made purchases the previous day, so wait-and-see sentiment re-emerged. Overall spot transactions weakened again, but traders' offers remained firm, and overall spot premiums saw little change.

Guangdong: Last Friday, the purchasing sentiment for refined zinc in the Guangdong region was 1.70, and the selling sentiment was 2.45. The zinc price center moved higher, and downstream fear of high prices was strong. Traders had difficulty with shipments, market offers declined, driving spot premiums lower.

Tianjin: Last Friday, the purchasing sentiment for refined zinc in the Tianjin region was 1.73, and the willingness-to-sell sentiment was 2.21. Zinc prices surged, and downstream buyers were cautious about purchasing at high prices. Combined with still-weak downstream consumption, traders had low willingness to sell. The market was relatively quiet, and overall market transactions were poor.

Ningbo: Last Friday, traders in the market mainly focused on shipments. There was some divergence in overall spot premium quotes, but futures zinc prices moved higher. Downstream zinc alloy plants made fewer inquiries, and spot transactions in Ningbo performed poorly.

Inventory: On May 29, LME zinc inventory increased by 5,475 mt to 113,800 mt, up 5.05%; according to SMM communication, as of May 28, China's inventory decreased by 4,100 mt to 260,900 mt.

Zinc price outlook: Overnight, LME zinc posted a small bearish candlestick, with the upper Bollinger Bands rail exerting pressure above and the 40/60-day moving averages providing support below. Driven by the ongoing US-Iran agreement, optimistic market sentiment strengthened, but ex-China social inventory saw a notable increase, and LME zinc rose first then fell, hovering at highs. Overnight, SHFE zinc posted a bearish candlestick, with the upper Bollinger Bands rail exerting pressure above and the middle Bollinger Bands rail providing support below. Dragged down by LME, SHFE zinc moved lower. Currently, ore supply remains tight, and smelter production is expected to decline further, but China's consumption has entered the off-season. With intertwined bullish and bearish sentiment in the market, upward momentum faces resistance.

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