LME zinc recorded a small bearish candlestick with wild swings in price [SMM Morning Meeting Minutes]

Futures: Overnight, LME zinc opened at $3,598/mt, quickly touching a high of $3,607.5/mt at the start of the session, before prices pulled back. During the midday session, LME zinc pushed above the daily moving average but pulled back again to a low of $3,568/mt. After entering the European trading session, LME zinc oscillated higher and recovered most of the lost ground, ultimately closing down at $3,595/mt, falling $8.5/mt, a decline of 0.24%. Trading volume decreased to 85,820 lots, and open interest increased by 434 lots to 231,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,860 yuan/mt, rising to a high of 24,995 yuan/mt at the start of the session. Subsequently, bulls took profits and exited, with prices pulling back to a low of 24,830 yuan/mt. During the session, prices oscillated higher as bears reduced positions. Near the close, prices edged up and traded near the daily moving average, ultimately closing up at 24,915 yuan/mt, gaining 115 yuan/mt, a rise of 0.46%. Trading volume fell to 50,122 lots, and open interest decreased by 273 lots to 101,000 lots.

Macro: Trump stated that the US was in the final negotiation stage to end the Iran war and refused to release funds to Iran before signing an agreement. Iran's Revolutionary Guard stated that ceasefires on all fronts including Lebanon were preliminary conditions for ending the war with the US. Hezbollah rejected the so-called results of direct Lebanon-Israel negotiations and only cared about a comprehensive ceasefire. US initial jobless claims rose to 225,000, hitting the highest level since February. Zelensky openly wrote to Putin, proposing a meeting. Putin said he was willing to negotiate with Ukraine based on the Anchorage meeting. Sources: the Bank of Japan was considering a rate hike in June. The PBOC announced it would conduct 500 billion yuan in outright reverse repo operations on June 5, with a tenor of 3 months. The National Development and Reform Commission (NDRC) announced that starting from 24:00 on June 4, domestic gasoline and diesel (standard products) prices would be reduced by 525 yuan/mt and 505 yuan/mt respectively. Futu: starting from June 12, existing accounts would be suspended from buying (opening positions) within mainland China.

Spot:

Shanghai: Yesterday, the refined zinc procurement sentiment in Shanghai was 1.84, and the shipments sentiment was 2.55. In the morning session, futures zinc prices fell below 25,000 yuan/mt Zn, but did not reach downstream psychological price levels. Purchases in the spot market were limited, overall trading activity showed no significant improvement, and spot premiums remained basically stable compared to the previous day.

Guangdong: Yesterday, the refined zinc procurement sentiment in Guangdong was 1.78, and the sales sentiment was 2.43. Futures prices moved lower in the morning, but prices still fluctuated at highs. Downstream made certain just-in-time procurement, but trading activity remained relatively ordinary due to high price suppression. Enterprises showed low enthusiasm for stockpiling, and spot premiums were flat compared to the previous day.

Tianjin: Yesterday, the refined zinc procurement sentiment in Tianjin was 1.75, and the shipments sentiment was 2.41. Zinc prices pulled back slightly but have not reached the psychological price level of downstream players. Wait-and-see sentiment among downstream players remains strong. Traders' shipment premiums stayed stable, the market was relatively quiet, and overall market transactions were average.

Ningbo: The Ningbo market had ample supply. Traders reported prices in a laid-back manner for their shipments. Spot premiums yesterday basically stayed stable compared to the previous day, but alloy plants downstream had poor orders and weak demand for zinc ingots. Spot zinc ingot transactions performed poorly yesterday.

Inventory: On June 4, LME zinc inventory decreased by 625 mt to 111,900 mt, a decline of 0.56%. According to SMM market communication, as of June 4, China's inventory decreased by 5,000 mt to 264,100 mt.

Zinc Price Outlook: Overnight, LME zinc recorded a small bearish candlestick, with support from the 10/60-day moving averages below. Optimism over the Lebanon ceasefire warmed up in the market, and inventories outside China declined. However, macro fluctuations have been significant recently, and LME zinc maintained wild swings. Overnight, SHFE zinc recorded a small bullish candlestick, with support from the 20/60-day moving averages below. China's inventory edged down slightly but remained above the high level of 260,000 mt. Off-season characteristics in end-use consumption emerged. SHFE zinc's upward momentum was blocked, but prices still had support below due to continuously declining ore TC, maintaining a high-level range.

Data Source Disclaimer: Apart from public information, other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute decision-making advice.