SMM News, March 19:
Futures: Overnight, LME zinc opened at $3,220.5/mt. In early trading, LME zinc briefly rose to a high of $3,227/mt, after which bulls reduced open interest and LME zinc fluctuated downward all the way, hitting a low of $3,130/mt near the close. It finally closed down at $3,132.5/mt, down $100.5/mt, a decline of 3.11%. Trading volume increased to 16,556 lots, and open interest fell by 6,295 lots to 208,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened lower with a gap at 23,110 yuan/mt. Thereafter, bears continued to add open interest, and SHFE zinc broke below support and fell to a low of 22,940 yuan/mt. It finally closed down at 23,010 yuan/mt, down 335 yuan/mt, a decline of 1.43%. Trading volume decreased to 55,828 lots, and open interest increased by 1,260 lots to 96,424 lots.
Macro:
The US Fed kept interest rates unchanged; Powell said it is not stagflation at present, and he will not leave before the investigation ends, and may not leave even after it ends; US PPI data exceeded expectations across the board; Iran’s Revolutionary Guard said it will launch the “toughest” strikes against the US and Israel; the Iranian president confirmed that Iran’s intelligence minister Khatib was killed; Iran’s energy facilities were attacked, and it vowed to retaliate by striking the oil facilities of three Middle Eastern countries; the General Office of the CPC Central Committee and the General Office of the State Council issued opinions on properly carrying out pilot work for extending rural land contracts by another 30 years after the expiration of the second round of land contracts; relevant documents on establishing a negative list management mechanism for fiscal subsidies are expected to be released soon.
Spot Market:
Shanghai: Refined zinc purchase sentiment in Shanghai was 2.46, and shipments sentiment was 2.71. Zinc prices on the futures market fell significantly, and downstream enterprises started pricing and purchasing on dips from the previous night. Spot transactions yesterday morning were moderate, and traders took the opportunity to raise spot quotations, with spot discounts in the market narrowing accordingly.
Guangdong: Refined zinc purchase sentiment in Guangdong was 2.43, and sales sentiment was 2.62. Yesterday, the center of zinc prices pulled back, and downstream buyers restocked on dips, with purchasing enthusiasm rising. At the same time, trading among traders was also relatively active, spot transactions improved somewhat, and premiums edged up.
Tianjin: Refined zinc purchase sentiment in Tianjin was 2.39, and shipments sentiment was 2.71. Yesterday, zinc prices continued to pull back sharply. Downstream buyers had basically already priced cargo earlier and gradually picked up goods. Concerned that zinc prices might continue to fall, they maintained strong wait-and-see sentiment. Market transactions were mainly among traders, traders’ shipping premiums were basically stable with a slight firmness, and overall market transactions were average.
Ningbo: Zinc prices on the futures market continued to fall, and traders accordingly raised spot quotations. Downstream enterprises priced and purchased on dips, overall transactions were moderate, and Ningbo spot discounts narrowed.
Social Inventory: As of March 18, LME zinc inventory fell by 350 mt to 118,025 mt, down 0.3%; according to SMM inquiries, as of March 16, China inventory increased.
Zinc Price Outlook: Overnight, LME zinc recorded a large bearish candlestick. The US Fed kept interest rates unchanged, US PPI data came in above expectations, and the US dollar strengthened, putting base metals under pressure. Fundamentally, support for LME zinc remained weak, and LME zinc continued to fall after breaking below key levels. It is expected to remain in the doldrums today. Overnight, SHFE zinc recorded a small bearish candlestick. With the US Fed keeping interest rates unchanged and LME zinc under pressure, weakness in the outer market dragged down the inner market. China’s inventory remained high, offering weak support for zinc prices. It is expected that SHFE zinc will mainly remain in the doldrums today.
Data Source Statement: Except for public information, all other data is processed and 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.
