Zinc Morning Meeting Notes on July 28
Futures Market: On Friday, LME zinc opened at $2,842/mt. During the morning session, LME zinc fluctuated around the daily average line, then continued to fluctuate upward throughout the afternoon session. During the night session, LME zinc reached a high of $2,856/mt before declining, approaching the end of the session, it hit a low of $2,816.5/mt, and finally closed at $2,829/mt, down $11.5/mt or 0.4%. Trading volume decreased to 8,275 lots, while open interest increased by 2,366 lots to 191,000 lots. On Friday, LME zinc recorded a bearish candlestick, with the upper Bollinger Band forming resistance. On Friday, the most-traded SHFE zinc 2509 contract opened at 22,905 yuan/mt. In the early session, SHFE zinc fluctuated upward to reach a high of 22,960 yuan/mt, then quickly declined to a low of 22,670 yuan/mt. Subsequently, it maintained a fluctuating trend towards the end of the session, finally closing at 22,715 yuan/mt, down 170 yuan/mt or 0.74%. Trading volume increased to 93,396 lots, while open interest increased by 1,621 lots to 131,000 lots.
Macro: Trump announced a trade agreement between the US and Europe; US Commerce Secretary: The deadline for tariff increases on August 1 will not be extended; Trump: Powell may be preparing for an interest rate cut; Japanese central bank officials may consider raising interest rates again this year; OPEC+ JMMC unlikely to change current production increase plans on Monday; Defense Secretary: Future targets may include Iran's Supreme Leader; CSRC: Fully committed to consolidating the market's stabilization and improvement; National general public budget revenue in H1 reached 11,556.6 billion yuan; Hong Kong media: A high-level US business delegation will visit China; Ten departments issued 23 measures to promote agricultural product consumption.
Spot Market:
Shanghai: At the end of long-term contracts, sentiment among traders in the Shanghai market rose again on Friday, with the premium over the average price expanding to 80 yuan/mt. However, high-priced domestic zinc ingots were mostly circulated among traders, with downstream buyers remaining cautious due to high prices, resulting in generally weak spot transactions.
Guangdong: Spot discounts of 10 yuan/mt against Shanghai. Overall, despite a slight MoM decline in futures prices on Friday, downstream purchasing enthusiasm remained weak, with market transactions remaining poor and spot premiums continuing to decline.
Tianjin: Tianjin reported spot discounts of 50 yuan/mt against Shanghai. With a slight pullback in futures prices, some downstream buyers engaged in minor restocking. Trader quotes were mixed, with overall premiums holding steady. Trading was mainly among traders, with overall transactions slightly improving compared to Thursday.
Ningbo: Spot parity with Shanghai. On Friday, there were many traders offering zinc ingots in Ningbo, with spot quotes remaining stable. However, downstream orders were weak, and coupled with high futures prices, enterprises remained cautious in purchasing spot cargoes, resulting in overall transactions maintaining just-in-time demand.
Social Inventory: On July 25, LME zinc inventory decreased by 1,125 mt to 115,775 mt, a decline of 0.96%. According to SMM communications, as of July 24, the total zinc ingot inventory across seven locations tracked by SMM was 98,300 mt, an increase of 4,700 mt from July 17 and 5,600 mt from July 21, indicating a rise in domestic inventory.
Zinc Price Forecast: On Friday, LME zinc recorded a bearish candlestick, with the upper band of the Bollinger Bands exerting pressure. As the China-US tariff trade negotiations approached, the market became cautious, with some bearish funds entering the market, causing LME zinc to fluctuate downward. On the same day, SHFE zinc also recorded a bearish candlestick, with the 5-day moving average acting as resistance. The positive sentiment brought about by previous policies gradually dissipated, with zinc ingot inventory continuously accumulating. The fundamental supply-demand imbalance persisted, with strong supply and weak demand. Coupled with the drag from LME's trend, SHFE zinc pulled back from its highs.
Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market exchanges, and relying on SMM's internal database models. These data are for reference only and do not constitute decision-making advice.
