Fluctuating Prospects of US-Iran Peace Talks, LME Zinc Center Shifts Slightly Lower [SMM Zinc Morning Meeting Minutes]

Zinc Morning Meeting Minutes, April 21

Futures: Overnight, LME zinc opened at $3,415/mt, dipped to $3,396/mt early in the session, then quickly rallied to touch a high of $3,460/mt before fluctuating and pulling back again. Toward the end of the session, LME zinc fell below the daily moving average, ultimately closing down at $3,414/mt, down $15/mt or 0.44%. Trading volume decreased to 10,132 lots, while open interest increased by 4,814 lots to 226,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened at 24,150 yuan/mt. After the open, SHFE zinc fluctuated upward, touching a high of 24,270 yuan/mt early in the session, then continuously pulled back from highs, dipping to 24,135 yuan/mt near the end of the session, ultimately closing down at 24,180 yuan/mt, down 25 yuan/mt or 0.1%. Trading volume decreased to 28,729 lots, while open interest increased by 2,672 lots to 83,164 lots.

Macro: Trump said it was "highly unlikely" to extend the ceasefire agreement with Iran, and that if it expired, bombs would go off. An Iranian Foreign Ministry spokesperson said there were currently no plans for a second round of talks with the US. US media reported that Vance was expected to head to Pakistan on Tuesday, with US-Iran talks planned for Wednesday. The US will host a second round of Lebanon-Israel talks on Thursday. US Fed nominee Warsh pledged to safeguard the independence of monetary policy. Sources said the Bank of Japan may hold off on raising interest rates at its April meeting. Apple announced a leadership change: Turnus will take over as CEO, while Cook will transition to Executive Chairman. President Xi Jinping spoke by phone with Saudi Crown Prince and Prime Minister Mohammed. State Council Premier Li Qiang called for accelerating the construction of a new-type energy system and promoting a green and low-carbon transformation of energy production and consumption models. The PBOC kept the one-year and five-year LPR unchanged at 3% and 3.5%, respectively.

Spot market:

Shanghai: Yesterday, the purchase sentiment for refined zinc in the Shanghai region was 2.04, and the shipments sentiment was 2.78. Zinc ingot inventory in Shanghai continued to accumulate. Yesterday morning, zinc futures prices fluctuated upward, and downstream enterprises' wait-and-see sentiment resurfaced due to high prices. Spot purchases performed poorly, while traders' offers remained relatively firm. Overall spot premiums held steady from the previous week, and most trading activity occurred among traders.

Guangdong: Yesterday, the purchase sentiment for refined zinc in the Guangdong region was 1.7, and the sales sentiment was 2.48. Yesterday, the zinc price center hovered at highs. Downstream purchase sentiment was subdued with insufficient purchase willingness. However, some suppliers in the market recently showed reduced eagerness to ship, coupled with a decrease in the circulating volume of some mainstream brands, which supported a slight increase in spot premiums.

Tianjin: Yesterday, the purchase sentiment for refined zinc in the Tianjin region was 1.71, and the shipments sentiment was 2.46. Yesterday, zinc prices continued to rally. Downstream buyers were cautious about purchasing at high prices, with fewer inquiries. Trading was mainly among traders. The spot export window opened, and traders showed a tendency to hold prices firm when shipping. The overall market was relatively sluggish.

Ningbo: Qilin zinc ingots arrived in Ningbo over the weekend. Yesterday, traders in the market mainly focused on shipments, but futures zinc prices moved higher. Downstream zinc alloy plants showed poor purchase willingness, and traders slightly lowered spot premiums to facilitate shipments. Overall spot transaction performance was mediocre.

Social inventory: On April 17, LME zinc inventory decreased by 1,825 mt to 111,000 mt, down 1.62%. According to SMM communication, as of April 20, China's inventory saw a cumulative increase.

Zinc price forecast: Overnight, LME zinc posted a small bearish candlestick, with the 5-day moving average providing support below. Prospects for US-Iran negotiations remained uncertain, the Strait of Hormuz was closed again, and market concerns resurfaced. LME zinc struggled to rise, with its center pulling back slightly MoM. Overnight, SHFE zinc posted a bullish candlestick, with the upper Bollinger Bands rail forming resistance. Market macro sentiment deteriorated. On the fundamentals side, SMM zinc ingot inventory recorded another increase on Monday, and China's consumption had yet to show significant momentum. SHFE zinc maintained a fluctuating trend during the night session. Attention should be paid to subsequent zinc ingot export developments.

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