Zinc Morning Meeting Minutes, May 26
Futures: Overnight, LME zinc was closed for Memorial Day. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,955 yuan/mt. At the beginning of the session, SHFE zinc fluctuated around the daily moving average, dipping to 24,880 yuan/mt during the session. Subsequently, bulls increased positions, pushing the SHFE zinc center upward to around 24,980 yuan/mt above the daily moving average for consolidation. It eventually closed higher at 24,970 yuan/mt, up 155 yuan/mt or 0.62%. Trading volume decreased to 43,802 lots, while open interest increased by 2,055 lots to 108,000 lots.
Macro: Trump: Enriched uranium must either be handed over to the US or destroyed. The US and Iran reportedly reached an understanding on Iran's frozen assets. Iran will reportedly open the strait within 30 days after the agreement is reached, and the ceasefire agreement will be extended by 60 days. Guinea, the world's largest bauxite producer, will announce export control measures in June.
Spot market:
Shanghai: The purchasing sentiment for refined zinc in the Shanghai region was 1.92, and the shipment sentiment was 2.54. Yesterday, there were more traders shipping out in Shanghai, but overall sentiment to hold prices firm persisted. Spot premiums in the market were basically stable. However, as futures zinc prices moved higher, downstream enterprises in east China mostly adopted a wait-and-see approach, and overall spot trades were sluggish.
Guangdong: The purchasing sentiment for refined zinc in the Guangdong region was 1.6, and the sales sentiment was 2.47. Although the zinc price center moved higher, premiums quoted by traders in the market remained relatively firm. Meanwhile, affected by invoicing issues, spot circulation was limited, and spot premiums still had support at the bottom.
Tianjin: The purchasing sentiment for refined zinc in the Tianjin region was 1.74, and the shipment sentiment was 2.38. Yesterday, zinc prices rallied, and downstream buyers were cautious about high prices, mainly restocking in small quantities for rigid demand. Tianjin saw inventory buildup. Traders' shipment premiums remained slightly stable, and overall market transactions were poor.
Ningbo: Over the weekend, long-term contract zinc ingots continued to arrive at the Ningbo market. Currently, overall cargo availability in the market is sufficient, but downstream alloy plants have mediocre orders and maintain certain raw material inventory. Yesterday, inquiries were few, and overall transactions were poor. Social inventory: On May 22, LME zinc inventory decreased by 225 mt to 111,025 mt, a decline of 0.2%. According to SMM communications, as of May 25, China's inventory increased by 2,500 mt to 265,000 mt.
Zinc price outlook: Overnight, LME zinc was closed for Memorial Day. Considering expectations of easing geopolitical conflicts, LME zinc is expected to mainly fluctuate at highs during the day. Overnight, SHFE zinc posted a five-day winning streak, with the daily candlestick center shifting upward and various moving averages below providing support. On the fundamentals side, ore TCs are approaching 0 yuan/mt Zn, and smelter comprehensive profits have declined notably. With more smelter maintenance scheduled in late June, zinc prices are expected to fluctuate at highs amid expectations of supply-side reductions. However, social inventory increased again to 265,000 mt due to weak consumption. Attention should be paid to the resistance level of 25,000 yuan/mt.
Data Source Statement: Data other than public information is SMM processed data based on public information, market communication, and SMM's internal database model, for reference only and does not constitute decision-making advice.
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