Latest Update in the SMM Zinc Market

[Zinc Morning Review] Last Friday, the most-traded SHFE zinc 2601 contract opened at 23,190 yuan/mt, initially fell rapidly to a low of 22,965 yuan/mt, then fluctuated upward above the daily average line driven by bulls covering positions, and maintained a rangebound fluctuation until the close, finally closing at 23,065 yuan/mt, down 240 yuan/mt (a decrease of 1.03%), with trading volume decreasing to 82,861 lots......

[SMM Morning Meeting Minutes: September PCE Data Falls Short of Expectations, LME Zinc Center Edges Up Slightly] Last Friday, the LME zinc contract opened at $3,086/mt, and after opening, the price quickly rose, reaching an intraday high of $3,125/mt. Subsequently, bears increased their positions, causing LME zinc to pull back and test a low of $3,075.5/mt. It maintained a fluctuating trend until the end of the session, finally closing up at $3,098.5/mt, an increase of $13.5/mt, or a gain of 0.44%.

[SHFE/LME price ratio oscillated around 7.4]: This week, the SHFE/LME price ratio continued to fluctuate around 7.4, and the import window for zinc ingots remained closed. Overseas, the December US ADP employment data fell short of expectations, boosting expectations for a US Fed interest rate cut. Coupled with the fact that overseas zinc inventories, although increasing, remained at low absolute levels, these two factors pushed the center of LME zinc prices higher.

[Macro Expectations and Fundamental Support Drive Zinc Prices Higher This Week] At the beginning of the week, a tug-of-war between longs and shorts emerged ahead of the US Fed's interest rate cut, with LME zinc maintaining a fluctuating trend. Subsequently, the US November ISM manufacturing PMI fell short of expectations, and the US dollar index remained weak, supporting a rise in LME zinc.

[High Prices Suppressed Enterprises' Just-in-Time Procurement, Spot Premiums/Discounts in Guangdong Fell This Week] Spot premiums/discounts in Guangdong dropped by around 10 yuan/mt WoW. As of Friday, mainstream #0 zinc was quoted at a discount of 45 yuan/mt against the market, and the Shanghai-Guangdong price spread widened...

[[Driven by Production Resumptions at Die-Casting Enterprises, Operating Rates Expected to Rise Next Week] This week, the operating rate for die-casting zinc alloy was 51.08%, down 0.23 percentage points WoW. Inventory side, zinc prices rose significantly this week, dampening some enterprises' purchasing enthusiasm. Meanwhile, spot premiums/discounts in east China were high, further causing a decline in raw material inventory this week...

[End-Use Demand Slowdown, Zinc Oxide Operating Rate Down] This week, the zinc oxide operating rate was 56.45%, down 0.92 percentage points WoW. Raw material side, zinc prices rose to a six-month high this week, while recent end-use demand for zinc oxide slowed down somewhat, leading to a slight decrease in purchasing enthusiasm among zinc oxide enterprises, and raw material inventory pulled back.

[Persistent Shortage of Domestic Zinc Concentrates Continues, TCs Decline Further in Multiple Regions]: This week, both domestic and imported zinc concentrate TCs continued to decrease. On a weekly basis, the SMM Zn50 domestic weekly TC average dropped by 200 yuan/mt in metal content WoW to 1,850 yuan/mt in metal content, while the SMM imported zinc concentrate index fell by $3.5/dmt WoW to $57.75/dmt....

[Market Supply Volume Shows No Improvement, Traders Continue to Hold Prices Firm]: Spot prices in Shanghai continued to rise this week, with the weekly average price up 55 yuan/mt WoW. As of Friday, the premium for ordinary domestic brands against the 2601 contract was 200–220 yuan/mt, while the premium for the high-priced brand Shuangyan against the 2601 contract was 260 yuan/mt.

[Zinc Ingot Mostly Pre-sold Earlier, Premiums Continue to Rise]: Spot premiums in Ningbo continued to rise this week, up 40 yuan/mt WoW from the weekly average price. As of Friday, spot prices in Ningbo against the 2601 contract were at a premium of 175 yuan/mt, and against Shanghai prices at a premium of 100 yuan/mt, fluctuating at highs during the week.