US Dollar Index Strengthened, LME Zinc Center Edged Down [SMM Zinc Morning Meeting Minutes]

SMM Zinc Morning Meeting Minutes, May 20

Futures: Overnight, LME zinc opened at $3,517.5/mt. After the open, LME zinc fluctuated along the daily average line, touching a high of $3,541.5/mt during the session before quickly pulling back from the high. Near the end of the session, LME zinc dipped to a low of $3,488/mt, then rebounded to near the daily average line, ultimately closing lower at $3,511/mt, down $4.5/mt or 0.13%. Trading volume decreased to 9,434 lots, and open interest fell by 5,126 lots to 239,000 lots. Overnight, the most-traded SHFE zinc 2607 contract opened at 24,750 yuan/mt. At the start of the session, SHFE zinc touched a high of 24,750 yuan/mt. After the open, SHFE zinc fluctuated lower throughout the session, dipping to a low of 24,445 yuan/mt, then gradually rebounded from the low to near the daily average line, ultimately closing lower at 24,555 yuan/mt, down 150 yuan/mt or 0.61%. Trading volume decreased to 31,882 lots, and open interest increased by 3,867 lots to 85,524 lots.

Macro: Trump: Iran has limited time, and the US may take action against Iran again. Vance: Significant progress has been made in US-Iran negotiations, but the US has also prepared a "Plan B." Mediators believe US-Iran negotiations have made little progress, with Iran insisting on its core demands. Google launched the Gemini 3.5-series models. NATO set a deadline: if the Strait of Hormuz is not opened by early July, it plans to deploy forces for escort operations. Sources: Indonesia plans to tighten national controls on commodity exports. Russian President Putin arrived in Beijing by special plane. According to the CSRC website: Yangtze Memory Technologies initiated IPO guidance.

Spot market:

Shanghai: Yesterday, the refined zinc purchase sentiment in the Shanghai region was 2.08, and the shipments sentiment was 2.6. Traders in the market mainly focused on shipments. Yesterday, spot premiums in the market were basically stable. During the morning daytime session, zinc futures prices edged lower, and some downstream buyers purchased at lower prices, but overall purchasing was largely on an as-needed basis.

Guangdong: Yesterday, the refined zinc purchase sentiment in the Guangdong region was 1.55, and the sales sentiment was 2.5. Yesterday, futures moved sideways, but due to maintenance at some smelters and invoice-related issues, spot cargo in circulation remained limited. Traders quoted relatively high premiums, and Guangdong premiums rose.

Tianjin: Yesterday, the refined zinc purchase sentiment in the Tianjin region was 1.81, and the shipments sentiment was 2.41. Yesterday, zinc prices mainly fluctuated, but downstream buyers still held a bearish outlook. Combined with weak downstream orders, purchase sentiment was subdued. Traders' shipment premiums remained slightly stable, and overall market transactions were still lackluster.

Ningbo: Yesterday, there were still few quotes in the Ningbo market. Overall spot premiums were basically stable. Some downstream alloy plants had already purchased at set prices the day before, and yesterday most adopted a wait-and-see attitude. Overall spot transactions in the market were lackluster.

Social inventory: On May 18, LME zinc inventory increased by 2,575 mt to 112,500 mt, up 2.34%; according to SMM communication, as of May 18, China's inventory edged up.

Zinc price forecast: Overnight, LME zinc posted a bearish candlestick, with the 5-day moving average forming resistance above. Expectations for US Fed interest rate hikes persisted, and the US dollar index strengthened from low levels, suppressing zinc price movements. LME zinc maintained a fluctuating trend, with the center edging down MoM. Overnight, SHFE zinc posted a bearish candlestick, with the 10-day moving average forming resistance above. On the fundamental side, declining zinc concentrate TCs provided some support for zinc prices, but as China gradually entered the traditional consumption off-season, zinc ingot consumption continued to drag on price movements. Upward momentum for zinc prices remained insufficient, and prices are expected to maintain a fluctuating trend in the short term.

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.