Stronger US Dollar Put LME Zinc Under Pressure [SMM Morning Meeting Summary]

SMM News, March 16:

Futures: Last Friday, LME zinc opened at $3,315.5/mt. At the beginning of the session, bulls and bears were intertwined, and LME zinc briefly rose to a high of $3,316.5/mt. Subsequently, longs reduced positions, and LME zinc fluctuated downward, falling to a low of $3,270.5/mt during European trading hours. հետո the center moved up slightly, fluctuating along the daily average line in consolidation, and finally closed down at $3,293.5/mt, down $21/mt, or 0.63%. Trading volume fell to 7,065 lots, and open interest decreased by 1,630 lots to 215,000 lots. Last Friday, the most-traded SHFE zinc 2604 contract opened at 24,205 yuan/mt. At the beginning of the session, SHFE zinc briefly rose to a high of 24,255 yuan/mt, then bears added positions, and SHFE zinc fluctuated downward all the way, falling to a low of 24,070 yuan/mt near the close, and finally closed down at 24,080 yuan/mt, down 60 yuan/mt, or 0.25%. Trading volume fell to 37,382 lots, and open interest increased by 1,553 lots to 76,744 lots.
Macro:
US Q4 GDP last year was revised down to only 0.7%, and January core PCE rose 3.1% YoY; a US judge rejected the subpoena against Powell, and the Department of Justice will appeal; the US, Israel, and Iran all had no intention of a ceasefire, and the Middle East conflict may become prolonged; the US secretary of defense said Iran’s new supreme leader was still alive, but may have been disfigured; the US called on multiple countries to send ships to escort navigation in the Strait of Hormuz; the IEA said record strategic crude oil reserves will be released immediately into the Asian market, while Europe and the US will need to wait until late March; the State Council executive meeting studied the establishment of a negative list management mechanism for local fiscal subsidies; China’s new aggregate financing in the first two months reached 960 billion yuan, and M2 at end-February rose 9% YoY; China-US economic and trade consultations will be held in France from March 14 to 17.
Spot Market:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.12, and shipments sentiment was 2.63. Zinc prices on the futures stayed at low levels. Last Friday, there were many traders making shipments in the Shanghai market, while downstream enterprises still purchased limited volumes. Spot transactions showed no improvement. Spot discounts in the market remained at low levels last Friday, and attention should be paid to the recovery of consumption next week.
Guangdong: Refined zinc purchase sentiment in Guangdong was 2.08, and sales sentiment was 2.25. Affected by recent fluctuations in the price spread between futures contracts, the Shanghai-Guangdong price spread gradually widened. However, overall consumption in the Guangdong market did not improve significantly last Friday. Enterprises still maintained just-in-time procurement, while trading among market traders was relatively active.
Tianjin: Refined zinc purchase sentiment in Tianjin was 2.22, and shipments sentiment was 2.56. Last Friday, zinc prices dropped back slightly, but zinc ingot previously price-fixed by downstream buyers arrived one after another, and overall purchase sentiment was not high. Tianjin zinc ingot inventory remained elevated, and traders slightly lowered premiums for shipments. Overall market transactions were still relatively average.
Ningbo: Ample zinc ingot supply was available in the market, traders actively offered shipments, and downstream enterprises had only average orders. No improvement was seen in inquiries and purchases last Friday, some suppliers continued to lower their offers, and spot discounts in the market continued to widen.
Social Inventory: As of March 13, LME zinc inventory fell by 850 mt to 97,900 mt, down 0.86%; according to SMM communication, as of March 12, inventory in China increased.
Zinc Price Outlook: Last Friday, LME zinc posted a small bearish candlestick. As uncertainty surrounding the Iran war continued to push up the US dollar, base metals were all under pressure, and LME zinc closed lower. It is expected to remain in the doldrums today. Last Friday, SHFE zinc also posted a small bearish candlestick. Macro sentiment was weak, geopolitical turmoil resurfaced, and consumption in China fell short of expectations. China’s zinc ingot inventory was still in an inventory buildup, with relatively heavy supply pressure, dragging the center of SHFE zinc lower. SHFE zinc is expected to remain in the doldrums.

Data Source Disclaimer: Except for public information, all other data is derived by SMM through processing based on public information, market communication, and SMM’s internal database models, and is for reference only and does not constitute decision-making advice.