LME zinc: At the beginning of the week, influenced by the significant underperformance of the US non-farm payrolls data from the previous week, US Fed officials stated that there might be more than two interest rate cuts within the year. Meanwhile, LME zinc inventories continued to decline to below 100,000 mt, with strong capital inflows in the LME market, causing LME zinc prices to rise continuously. Subsequently, Trump announced a series of major tariff moves, and the US July non-manufacturing PMI slipped from 50.8 in June to 50.1, lower than the expected 51.5. Dragged down by tariff concerns and lower-than-expected data, market sentiment was relatively weak, and LME zinc prices declined slightly. Then, some US Fed officials still indicated that an interest rate cut was suitable in the short term, increasing expectations for a US Fed interest rate cut. Under these circumstances, the US dollar index was dragged down and fell, while LME zinc prices continued to rise. Later, from a macro perspective, influenced by Trump's nomination of an interim US Fed governor, market expectations for an interest rate cut continued to increase, the US dollar index fell, and the US and Russia planned to hold a meeting next week. Coupled with the continuous decline in overseas inventories to below 90,000 mt on the fundamentals side, LME zinc prices rose again. Then, as the market continued to digest market news, and the 1-year inflation expectations of the New York Fed in July rose, LME zinc prices pulled back slightly. Subsequently, LME zinc prices rose again and maintained a fluctuating trend. As of 15:00 on Friday this week, LME zinc closed at $2,815.5/mt, up $86/mt, or 3.15%.
SHFE zinc: At the beginning of the week, influenced by the digestion of macro sentiment, SHFE zinc prices declined briefly. Then, according to SMM communication, as of Monday this week (August 4), the total zinc ingot inventory in seven regions tracked by SMM increased to 107,300 mt. Although the domestic fundamentals continued to show a pattern of strong supply and weak demand, the continuous rise in the LME market provided a certain driving effect for SHFE zinc, causing SHFE zinc prices to rise as well. Subsequently, driven by the strong rally in the LME market, SHFE zinc opened higher with a gap. However, the domestic fundamentals remained unchanged, providing weak price support but with a high concentration of overseas capital. SHFE zinc maintained a fluctuating trend under the combined influence of domestic and overseas factors. Then, Trump stated that the US-Russia talks were productive, coupled with the increased expectations for a US Fed interest rate cut boosting LME zinc, SHFE zinc opened higher with a gap under the influence of the LME market. Subsequently, SHFE zinc prices pulled back briefly as the market digested macro news. However, then the US and Russia planned to hold negotiations on issues such as US-Russia relations and the Russia-Ukraine conflict next week. Market macro sentiment recovered, coupled with the continuous decline in overseas inventories, SHFE zinc prices rose again. Subsequently, influenced by the LME market and domestic fundamentals, SHFE zinc opened lower with a gap and maintained a fluctuating trend. As of 15:00 on Friday this week, SHFE zinc closed at 22,515 yuan/mt, up 195 yuan/mt, or 0.87%.
