Futures Market: Last Friday, LME zinc opened at $2,726.5/mt. After opening, LME zinc briefly touched a high of $2,733/mt before declining steadily to below the daily average line, dipping to a low of $2,679/mt. During European trading hours, bulls increased their positions in SHFE zinc, causing the price center to edge up slightly and fluctuate considerably around the daily average line. Towards the end of the session, LME zinc declined, closing down at $2,686/mt, down 40 yuan/mt or 1.47%. Trading volume decreased to 98,763 lots, while open interest increased by 3,392 lots to 228,000 lots. Last Friday, the most-traded SHFE zinc 2506 contract opened at 22,480 yuan/mt. In the early session, bulls increased their positions, pushing SHFE zinc up to a high of 22,565 yuan/mt. Subsequently, as bulls reduced their positions, SHFE zinc fluctuated downward, dipping to a low of 22,415 yuan/mt. It eventually closed down at 22,425 yuan/mt, down 75 yuan/mt or 0.33%. Trading volume decreased to 53,048 lots, while open interest decreased by 1,861 lots to 92,485 lots.
Macro: Moody's downgraded the US sovereign credit rating, prompting criticism from the White House. Trump stated that new tariffs would be imposed on many countries in the next two to three weeks. US one-year inflation expectations for May reached their highest level since 1981, while consumer confidence slightly dipped to the second-lowest level on record. US Fed's Bostic expects one interest rate cut this year and believes the US will not fall into a recession. The Russia-Ukraine negotiations lasted only two hours, with Russia demanding Ukraine's withdrawal as a condition for a ceasefire, which Ukraine deemed "unacceptable," resulting in no progress in the talks. Trump stated that he would speak with Putin and impose "devastating" sanctions on Russia if no agreement on Ukraine could be reached. Iran's Foreign Minister stated that Iran's uranium enrichment activities would continue regardless of whether an agreement is reached. Hamas and Israel held a new round of Gaza ceasefire negotiations, with Israel's Defense Minister confirming the death of the leader of Hamas' military wing in the Gaza Strip. In March, China reduced its US Treasury holdings by $18.9 billion, with its holdings ranking third.
Spot Market:
Shanghai: The futures market continued to fluctuate, with traders maintaining stable spot premium quotes. Downstream demand remained just-in-time, and buying sentiment was low last Friday, resulting in slightly sluggish spot trades overall.
Guangdong: Overall, downstream demand in Guangdong remained primarily just-in-time procurement. Last Friday, Guangdong underwent a contract rollover from the 2506 contract to the 2507 contract. The futures market maintained a fluctuating trend, with enterprises' shipments being relatively average. Some traders chose to slightly lower their premiums for shipments, but the contract rollover caused spot premiums and discounts to rise somewhat.
Tianjin: Last Friday, the futures market pulled back slightly, but downstream purchase sentiment remained low, with just-in-time restocking being the main activity. Traders continued to lower their premiums for shipments, and overall market transactions improved slightly compared to the previous day.
Ningbo: Last Friday, there were very few traders shipping goods in the market, with almost no quotes for domestic spot premiums. Downstream entities had made significant purchases earlier and showed little willingness to inquire or purchase, resulting in sluggish overall market transactions. Attention is now focused on the arrival of zinc ingots next week.
Social inventory: On May 16, LME zinc inventory decreased by 975 mt to 164,200 mt, a decline of 0.59%. According to communication with SMM, as of Thursday (May 15) this week, the total zinc ingot inventory across seven locations tracked by SMM was 86,300 mt, an increase of 3,000 mt from May 8 and an increase of 800 mt from May 12. Domestic inventory recorded an increase.
Zinc price outlook: Last Friday, LME zinc recorded a bearish candlestick, with the 60-day moving average acting as resistance above and the 10/20-day moving averages providing support below. Trump's tariff policy has introduced new uncertainties, with US inflation expectations reaching a new high while consumer confidence indices declined, increasing macro uncertainty and causing LME zinc to trade under pressure. Last Friday, SHFE zinc also recorded a bearish candlestick, with the 40/60-day moving averages acting as resistance above and the 10/20-day moving averages providing support below. On the fundamental side, there are still expectations of easing supply conditions in the future. Meanwhile, the recent continuous inflow of imported zinc ingots has provided some supplement to domestic spot cargo, with no significant bright spots in downstream consumption. As a result, SHFE zinc lacks sufficient support, and its price center has moved downward.
