Mine-Side Disruptions Increase, LME Zinc Continues to Rally [SMM Morning Meeting Minutes]

SMM News, May 13:

Futures: Overnight, LME zinc opened at $3,482/mt. At the beginning of the session, LME zinc briefly dipped to a low of $3,457/mt before bulls increased positions, driving LME zinc to fluctuate upward throughout the session, touching a high of $3,542.5/mt near the close, and ultimately settling up at $3,532.5/mt, up $50.5/mt or 1.45%. Trading volume increased to 15,265 lots, and open interest rose by 727 lots to 242,000 lots. Overnight, the most-traded SHFE zinc 2606 contract opened higher with a gap at 24,620 yuan/mt. At the beginning of the session, bulls increased positions, and SHFE zinc quickly rose to touch a high of 24,820 yuan/mt before losing upward momentum, with the center shifting lower into a range-bound pattern, ultimately settling up at 24,640 yuan/mt, up 260 yuan/mt or 1.07%. Trading volume fell to 78,623 lots, and open interest increased by 2,742 lots to 90,915 lots.
Macro:
India raised the basic customs duty on gold and silver imports from 5% to 10%; US overall CPI in April hit a new high since May 2023; US Fed's Goolsbee called the inflation trend "disappointing"; Russia lowered its 2026 oil production and export forecasts; US Defense Secretary: there are plans for escalation against Iran if necessary; Iran: if attacked again, it may enrich uranium to 90%; domestic airline fuel surcharges may be raised again starting May 16.
Spot market:
Shanghai: The purchase sentiment for refined zinc in the Shanghai region was 1.96, and the shipments sentiment was 2.57. In the morning session, zinc futures prices rose significantly MoM, and downstream enterprises showed strong fear of high prices. Inquiries and purchases decreased yesterday, with traders mainly making shipments. Spot premiums edged lower, and overall spot trades turned sluggish.
Guangdong: The purchase sentiment for refined zinc in the Guangdong region was 1.69, and the sales sentiment was 2.6. Yesterday, the zinc price center rose, and downstream buyers showed obvious fear of high prices under pressure from high prices. However, traders' offers remained relatively high, and spot premiums held relatively firm, fluctuating in a slight discount range.
Tianjin: The purchase sentiment for refined zinc in the Tianjin region was 1.81, and the shipments sentiment was 2.35. Yesterday, zinc prices surged significantly, and downstream buyers were cautious about purchasing due to fear of high prices, with few inquiries. Due to invoice issues, traders still showed a slight tendency to hold prices firm on shipments, and overall market transactions were poor.
Ningbo: Yesterday, market cargo volumes remained limited, and overall spot premiums stayed firm. However, as futures zinc prices rose, downstream alloy plants showed poor purchase willingness due to fear of high prices yesterday, and overall transactions deteriorated MoM.
Social inventory: On May 12, LME zinc inventory increased by 1,125 mt to 111,425 mt, up 1.02%. According to SMM's market communication, as of May 11, China's inventory increased.
Zinc price outlook: Overnight, LME zinc posted a large bullish candlestick. Although expectations for US Fed interest rate hikes this year intensified, market concerns over supply escalated. Kazakhstan's Kazzinc reduced load operations at its lead-zinc mine following an accident, driving LME zinc higher. LME zinc is expected to hold up well today. Overnight, SHFE zinc posted a large bullish candlestick. Disruptions to imported ore increased, and market tight supply sentiment intensified. Against the backdrop of rising energy and sulphuric acid costs, zinc concentrate TCs remained at low levels, driving SHFE zinc higher. SHFE zinc is expected to hold up well today.

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 for reference only and does not constitute decision-making advice.