Social Inventory Slightly Increased, Zinc Premium and Price Spread Between Futures Contracts Converged [Institutional Commentary]

On Monday, the most-traded SHFE zinc ZN2506 contract fluctuated rangebound during the day and bottomed out at night, while LME zinc rose first and then fell. Spot market: The mainstream transaction prices of Shanghai 0# zinc were concentrated at 22,900-23,110 yuan/mt, with a premium of 280-300 yuan/mt against the 2505 contract. As the delivery date approached, the price spread between futures contracts narrowed, and spot premiums declined MoM. Downstream sentiment was cautious, and spot inquiries and transactions were moderate. SMM: As of Monday, social inventory stood at 105,600 mt, up 3,500 mt WoW from Thursday.

Overall, the tariff impact has temporarily eased but remains volatile, and market sentiment is weak. The weighted open interest of SHFE zinc fluctuated around 216,000 lots. The stabilization and rebound of zinc prices have suppressed downstream purchases, and inventory increased slightly. The zinc ingot import window briefly opened, with a small amount of imports flowing in, leading to a decline in spot premiums and a convergence of the price spread between near-month contracts. Short-term fundamental imbalances are not prominent, and zinc prices follow the fluctuations of the non-ferrous sector, expected to remain in a low-range consolidation.