US Dollar Index Strengthened, LME Zinc Center Remained at a Low Level [SMM Zinc Morning Meeting Summary]

Zinc Morning Meeting Summary for March 27

Futures: Overnight, LME zinc opened at $3,078/mt. After the opening, LME zinc fluctuated downward and hit a low of $3,044.5/mt. It then rebounded rapidly to an intraday high of $3,118.5/mt, before continuously retreating from highs and finally closing down at $3,073.5/mt, down $75/mt, or 0.24%. Trading volume increased to 11,961 lots, and open interest rose by 1,232 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2605 contract opened at 23,100 yuan/mt. After the opening, SHFE zinc fluctuated higher and touched a high of 23,340 yuan/mt near the beginning of the session, then slowly pulled back amid fluctuations to around the daily average line, hitting a low of 23,070 yuan/mt, and finally closed up at 23,170 yuan/mt, up 100 yuan/mt, or 0.43%. Trading volume increased to 70,197 lots, and open interest rose by 661 lots to 104,000 lots.

Macro: US media reported that the US Department of Defense was considering redirecting military aid to Ukraine for use in the Middle East; Turkey sold 22 mt of gold in a single week, the highest since 2018; Trump said strikes on Iran’s energy facilities were postponed at the request of the Iranian government, which Iran denied; Trump unveiled a “big gift” to Iran: allowing 10 oil tankers to pass through the strait; fuel surcharges on China’s domestic air routes were confirmed to rise on April 5.

Spot Market:

Shanghai: Yesterday, refined zinc buying sentiment in Shanghai was 2.16, and shipping sentiment was 2.58. Zinc prices fluctuated in futures, while downstream enterprises’ purchase sentiment remained weak. Overall spot trading showed no improvement, and traders’ shipment quotes changed little from the previous day. Attention should be paid to subsequent consumption performance.

Guangdong: Yesterday, refined zinc buying sentiment in Guangdong was 2.1, and selling sentiment was 2.56. Prices have recently fluctuated rangebound. As downstream buyers had previously made more purchases at low prices, current demand was mostly just-in-time procurement. Overall trading in the Guangdong market was relatively ordinary yesterday, and spot premiums were unchanged.

Tianjin: Yesterday, refined zinc buying sentiment in Tianjin was 1.97, and shipping sentiment was 2.43. Yesterday, zinc prices were mainly in the doldrums, and downstream buyers still maintained a wait-and-see stance, with just-in-time procurement dominating. Traders’ shipment premiums continued to edge lower, and overall market transactions were average.

Ningbo: Yesterday, traders’ quotes in the Ningbo market were basically stable from the previous day. Downstream enterprises had built up some raw material inventory through earlier purchases, and procurement yesterday still followed demand. Spot trading delivered mediocre performance, and market premiums showed relatively small changes.

Social Inventory: On March 25, LME zinc inventory fell by 825 mt to 115,650 mt, down 0.71%; according to SMM, as of March 26, inventory in China declined.

Zinc Price Outlook: Overnight, LME zinc posted a bearish candlestick, with the 10-day moving average above forming resistance. Market expectations for a swift end to the war in the Middle East faded, the US dollar index continued to strengthen, and zinc prices remained under pressure. LME zinc pulled back from highs during the session, while the overall center basically stabilized at a low level. Overnight, SHFE zinc recorded a bullish candlestick, with support from the 10-day moving average below. On the macro front, geopolitical conflicts persisted, while on the fundamentals side, as downstream consumption gradually recovered, China’s zinc ingot inventory continued to decline. SHFE zinc edged higher in the night session, with its center moving up slightly.

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.