[SMM Zinc Morning Comment] Overnight, the most-traded SHFE zinc 2605 contract opened lower with a gap at 22,350 yuan/mt, the intraday low. Subsequently, bulls added to open interest, and SHFE zinc fluctuated upward all the way, touching a high of 22,940 yuan/mt near the close and finally closing up at 22,860 yuan/mt, up 155 yuan/mt, or 0.68%. Trading volume fell to 93,582 lots, and open interest increased by 852 lots to 105,000 lots.

SMM News, March 20: Overnight, LME lead opened at $1,911/mt. During the 9:00–12:00 session, LME lead fluctuated rangebound within $1,906–1,915/mt, holding up well overall and touching a high of $1,915.5/mt. After 12:00, LME lead turned into a unilateral downward trend, plunging to a low of $1,872.5/mt. During the night session, LME lead bottomed out, and by the close it fluctuated higher to repair losses to the $1,895–1,898/mt range, finally closing at $1,897/mt, down $16/mt, or 0.84%. Overnight, the most-traded SHFE lead 2605 contract opened at a low of 16,300 yuan/mt. In early trading, SHFE lead fluctuated upward and touched a high of 16,480 yuan/mt, then dropped back slightly and fluctuated rangebound within 16,395–16,460 yuan/mt. It finally closed at 16,435 yuan/mt, posting a small bullish candlestick, up 20 yuan/mt, or 0.12%. Yesterday, SHFE lead pulled back. Suppliers of primary lead showed average willingness to ship, while smelter quotes remained stable; supply in the secondary lead market was relatively ample, and smelters held prices firm on shipments, with overall transactions poor. Downstream battery plants maintained full production, mainly purchasing for rigid demand and long-term contracts, while spot order transactions were mediocre. SMM expects lead prices to remain in the doldrums with fluctuations in the short term.

Futures: Overnight, LME lead opened at $1,911/mt. During 9:00–12:00, LME lead fluctuated rangebound within $1,906–1,915/mt, overall holding up well and touching a high of $1,915.5/mt. After 12:00, LME lead turned into a unilateral downtrend, plunging to a low of $1,872.5/mt. In the night session, LME lead bottomed out and rebounded, with late-session fluctuations repairing prices to the $1,895–1,898/mt range, finally closing at $1,897/mt, down $16/mt, or 0.84%. Overnight, the most-traded SHFE lead 2605 contract opened at a low of 16,300 yuan/mt. In early trading, SHFE lead fluctuated upward and touched a high of 16,480 yuan/mt, then dropped back slightly and maintained fluctuate rangebound within 16,395–16,460 yuan/mt. It finally closed at 16,435 yuan/mt, posting a small bullish candlestick, up 20 yuan/mt, or 0.12%. On the macro front: 1. The market began betting that the US Fed would raise interest rates. 2. Trump: He was completely unaware of Israel's attack on Iran's South Pars natural gas field. 3. US Treasury Secretary Bessent: Sanctions on Iran's seaborne oil may be lifted in the coming days, and Iranian oil will be used to push for lower prices. 4. Iran: Retaliatory actions over attacks on Iran's energy infrastructure have not yet ended. 5. Joint statement by six countries: Measures are being prepared to safeguard security in the Strait of Hormuz. 6. The US defense secretary confirmed that a funding request for $200 billion has been submitted to the White House for approval. 7. Ministry of Finance: In January-February 2026, securities transaction stamp tax reached 4.99 billion yuan, up 1.1x YoY. 8. The central bank: It will firmly safeguard the stable operation of financial markets including stocks, bonds, and foreign exchange. 9. Chinese airlines collectively raised fuel surcharges, with the maximum increase doubling. Spot Fundamentals: SHFE lead reversed and pulled back, while suppliers showed mediocre willingness to ship. There were not many spot order quotations. Meanwhile, quotations for cargoes self-picked up from production site from primary lead smelters remained stable, with mainstream producing areas quoted at premiums of 0-80 yuan/mt ex-works against the SMM #1 lead average price; secondary lead smelters shipped in line with market conditions, but spot order quotations were limited, and some smelters held prices firm on shipments, with secondary refined lead quoted around parity ex-works against the SMM #1 lead average price. In addition, downstream enterprises mainly made just-in-time procurement. Coupled with the approach of late month, some enterprises successively picked up goods under current-month long-term contracts, and spot market transactions were mediocre. Inventory: As of March 19, LME lead inventory fell by 125 mt, or 0.04%, to 284,250 mt; SMM social inventory of lead ingot across five regions decreased slightly. Today's Lead Price Forecast: Yesterday, SHFE lead pulled back. Primary lead suppliers showed mediocre willingness to ship, and smelter quotations remained stable; supply in the secondary lead market was relatively ample, and smelters held prices firm on shipments, but overall transactions were poor. Downstream battery plants maintained full production, mainly purchasing for just-in-time procurement and long-term contracts, while spot order transactions were mediocre. SMM expects lead prices to remain in the doldrums with fluctuations in the short term.

As of Thursday this week, the average SMM battery-grade nickel sulphate price edged down slightly WoW. Demand side, trading sentiment was weak in mid-month, and some producers made inquiries recently, but as downstream orders remained unclear, acceptance of high-priced nickel salt was weak; supply side, due to uncertainty in Indonesia's recent MHP supply, MHP payables moved higher, driving up raw material costs for some producers and correspondingly lifting their quotes. Looking ahead, with the month-end procurement period approaching, attention should be paid to support from the raw material side for nickel sulphate prices. Inventory, this week upstream nickel salt smelter inventory index held at 4.7 days, downstream precursor plant inventory index fell from 7.1 days to 6.8 days, and integrated enterprises' inventory index held at 6.8 days; in terms of buyer-seller strength, this week the upstream nickel salt smelters' Willingness to Sell Sentiment Factor held at 1.8, the downstream precursor plants' procurement sentiment factor fell from 2.7 to 2.6, and integrated enterprises' sentiment factor held at 2.4. (Historical data is available in the database.)

Raw material side, spot lithium carbonate prices fluctuated this week, cobalt sulphate prices remained temporarily stable, and nickel sulphate prices dropped slightly.

SMM Nickel News, March 19: Macro and Market News: (1) The US Fed kept interest rates unchanged at 3.5%-3.75%, while Governor Milan believed rates should be cut by 25 basis points. The impact of developments in the Middle East on the US economy remained uncertain. The dot plot maintained expectations for one interest rate cut in each of the next two years, but the distribution turned more hawkish. Market bets on the US Fed's rate cuts for the full year were reduced from about 20 basis points to less than 11 basis points. (2) Powell believed interest rates were at the high end of the neutral range, or slightly restrictive, leaving policy in a favorable position, and said the current situation was not stagflation. This energy supply disruption was a one-off event. Regarding whether he would remain in office, Powell stressed that he would not leave before the investigation concluded, and might not leave even after it concluded. If no successor was confirmed, he would continue to serve as acting chair. Spot Market: On March 19, the SMM price of #1 refined nickel fell by 3,100 yuan/mt from the previous trading day. In terms of spot premiums, the average price of Jinchuan #1 refined nickel was 6,750 yuan/mt, up 200 yuan/mt from the previous trading day; mainstream electrodeposited nickel brands in China were quoted at -300-400 yuan/mt. Futures Market: The most-traded SHFE nickel contract (2605) plunged sharply during the session and closed the morning session at 131,760 yuan/mt, down 2.79%. Tensions in the Middle East remained elevated, and the escalating conflict between Iran and Israel triggered market concerns over rising energy prices, intensifying inflation, and economic slowdown. Safe-haven sentiment heated up. Combined with the US Fed keeping interest rates unchanged while raising inflation expectations, expectations for interest rate cuts were revised down, causing metal prices to fall sharply across the board. Pressure from the macro perspective may continue to dominate market sentiment, and nickel prices are expected to remain in the doldrums.