Futures: Overnight, LME zinc opened at $2,821.5/mt. At the beginning of the session, shorts exited the market, pushing the center of LME zinc higher to touch $2,837/mt. During the European trading session, shorts increased their positions, causing LME zinc to plunge and hit a low of $2,773.5/mt in the night session. Subsequently, the center of LME zinc moved higher, and it finally closed down at $2,790/mt, down $26.5/mt, or 0.94%. Trading volume decreased to 12,931 lots, while open interest increased by 1,662 lots to 225,000 lots. Overnight, the most-traded SHFE zinc 2505 contract opened lower with a gap at 23,205 yuan/mt. At the beginning of the session, shorts increased their positions, causing SHFE zinc to break below the daily moving average and fluctuate around 23,140 yuan/mt, hitting a low of 23,135 yuan/mt during the session. Subsequently, the center of SHFE zinc moved higher, and it finally closed down at 23,190 yuan/mt, down 190 yuan/mt, or 0.81%. Trading volume decreased to 64,845 lots, while open interest increased by 1,555 lots to 112,000 lots.
Macro: Trump imposed a "minimum benchmark tariff" on all countries and will levy reciprocal tariffs; it is reported that Trump is seriously considering indirect nuclear negotiations with Iran; the US Treasury Secretary stated that the Ukrainian delegation may arrive in the US as early as this week; Tesla's Q1 deliveries plummeted, marking the worst quarterly performance since 2022; the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Improving the Price Governance Mechanism"; A-share new accounts in Q1 increased by 31.74% YoY; the Eastern Theater Command successfully completed joint exercises around Taiwan Island.
Spot market:
Shanghai: In the morning session, the market quoted premiums of 20-40 yuan/mt against the average price, with fewer quotes against the futures. In the second trading session, premiums for ordinary domestic brands against the 2505 contract were 50-70 yuan/mt, Baiyin quoted premiums of 50 yuan/mt against the 2504 contract, Huize quoted premiums of 100 yuan/mt against the 2505 contract, and the high-priced brand Shuangyan quoted premiums of 120 yuan/mt against the 2505 contract. In the morning session, futures prices declined, and inquiries and purchases by enterprises improved. However, traders sold heavily at the beginning of the week, and the market had limited spot supply yesterday, coupled with some traders holding back sales, leading to a MoM increase in Shanghai spot premiums. Overall trading was mainly among traders.
Guangdong: Spot discounts against Shanghai were 30 yuan/mt, and the Shanghai-Guangdong price spread remained unchanged. In the first session, suppliers quoted premiums of 30-60 yuan/mt for Qilin, Mengzi, Huize, and Lanzinc. In the second session, Qilin and Mengzi quoted premiums of 40-60 yuan/mt against the net price. Overall, the center of zinc prices declined yesterday, but due to previous downstream restocking, some enterprises had low buying sentiment, and spot trading was relatively moderate. The premiums/discounts quoted by traders rose yesterday, driving up Guangdong spot premiums/discounts.
Tianjin: Tianjin quoted discounts of around 10 yuan/mt against Shanghai. By the midday close, Xinzi quoted premiums of 60-120 yuan/mt against the 05 contract, Xikuang quoted parity against the 05 contract, and the high-priced brand Zijin quoted premiums of 140-180 yuan/mt against the 05 contract. Zinc prices fluctuated downward yesterday. Due to the significant pullback the previous night, downstream users restocked for the Qingming Festival, coupled with good sales this week, leading to limited spot supply in the market and a noticeable increase in premiums. Traders raised their quotes, but trading was relatively weak yesterday, mostly in the form of pre-sales, with active trading among traders. Overall trading was moderate.
Ningbo: Spot premiums against Shanghai were 50 yuan/mt, and the Ningbo market rolled over to quote against the 2505 contract. In the first session, Yongchang quoted premiums of 100 yuan/mt against the 2505 contract, Qilin quoted premiums of 100-120 yuan/mt against the 2505 contract, Honglu-v quoted premiums of 70 yuan/mt against the 2504 contract, and Huize quoted premiums of 90 yuan/mt against the 2504 contract. In the second session, traders' quotes were unchanged from the previous session. There were few traders selling in the Ningbo market, and with limited supply, some traders began quoting pre-sales. Coupled with a slight decline in futures prices, Ningbo spot premiums rose yesterday, and overall spot trading was moderate.
Social inventory: On April 2, LME zinc inventory decreased by 100 mt to 136,400 mt, down 0.07%. According to SMM communication, as of Monday (March 31), SMM's seven-region zinc ingot inventory totaled 125,900 mt, down 3,000 mt from March 24 and 4,100 mt from March 27, recording a decrease in domestic inventory.
Zinc price forecast: Overnight, LME zinc recorded a large bearish candlestick, with the 5/10-day moving averages forming resistance. The market remains concerned about the economic damage caused by reciprocal tariffs and fears of a US economic recession, dragging down non-ferrous metals. The center of LME zinc moved lower. Trump signed an executive order imposing a 10% "minimum benchmark tariff" on all countries and will levy reciprocal tariffs. LME zinc is expected to fluctuate downward. Overnight, SHFE zinc recorded a large bearish candlestick, with the lower Bollinger Band forming resistance. From a macro perspective, the market is still waiting for details on reciprocal tariffs, while fundamental consumption has not seen significant growth, and supply remains loose. SHFE zinc declined, and it is expected to fluctuate downward in the short term.
