SMM

Spot Market Fundamentals
Shanghai: In the early trading session, the market quoted spot premiums of 100-120 yuan/mt over the average price, with almost no follow-up quotations. In the second trading session, ordinary domestic zinc ingots were quoted at premiums of 410-430 yuan/mt against the SHFE 2501 contract, Huize zinc was quoted at a premium of 450 yuan/mt against the SHFE 2501 contract, while high-end brand Shuangyan had no quotations against the SHFE 2501 contract. On the first trading day after the New Year’s Day holiday, no deliveries were seen for new annual long-term contracts of zinc ingots. Yesterday, there were still few quotations from traders for market sales, while downstream just-in-time procurement supported high spot premiums. Tianjin: By midday close, Xinzi was quoted at premiums of 300-350 yuan/mt against the SHFE 01 contract, Chihong was quoted at 300-350 yuan/mt, Xikang had no quotations, and Bailin also had no quotations. High-end brand Zijin was quoted at premiums of 370-420 yuan/mt against the SHFE 01 contract. The futures market pulled back slightly, market supply increased, but downstream maintained a wait-and-see sentiment with limited purchases. Traders lowered premiums and discounts to facilitate sales, resulting in average overall market transactions. Guangdong: In the first trading session, suppliers quoted premiums of 525-555 yuan/mt for Qilin, Mengzi, Danxia, Feilong, and Lanjin. On the first day after the holiday, the futures market edged down, prompting downstream enterprises to restock at lower prices, improving trading activity. In the second trading session, Qilin was quoted at premiums of 540-545 yuan/mt over the online price. Overall, some downstream enterprises restocked at lower prices to meet demand for the Chinese New Year break, leading to slightly improved transactions yesterday. Ningbo: In the first trading session, Honglu-V was quoted at a premium of 430 yuan/mt against the SHFE 2501 contract. In the second trading session, traders maintained quotations at the same level as the previous session. On the first trading day of the New Year, Ningbo zinc ingot supply remained limited. With tight supply, spot premiums rose, but some downstream enterprises had sufficient inventory from earlier purchases, resulting in weak market transactions yesterday.



Social Inventory: According to the SMM survey, as of Thursday (January 2), total zinc ingot inventory across SMM's seven surveyed regions stood at 64,500 mt, down 700 mt from December 26 but up 2,000 mt from December 30, marking an increase in domestic inventory. Shanghai inventory increased as some imported zinc ingots continued to arrive during the week, replenishing market supply, leading to a slight inventory increase. Guangdong inventory decreased as normal arrivals at Guangdong warehouses were offset by significant outflows from warehouses, resulting in continued inventory reduction. Tianjin inventory increased as warehouses received shipments during the week, and just-in-time procurement by downstream enterprises led to a slight inventory increase. Overall, the combined inventory of the three regions increased by 1,300 mt, while the total inventory across the seven regions increased by 2,000 mt.
Zinc Price Forecast for Today: Overnight, LME zinc recorded a large bearish candlestick with no lower shadow, while LME inventory decreased by 800 mt to 234,100 mt, a decline of 0.34%. The US dollar continued to rise, and market concerns over increased tariffs dampened global demand. Additionally, global manufacturing data showed declines, weakening demand and pressuring LME zinc downward. It is expected to fluctuate downward today. Overnight, SHFE zinc recorded a small bearish candlestick, with the middle Bollinger Band forming resistance above. The KDJ indicator opened downward, macro sentiment weakened, and the US dollar continued to strengthen. From a fundamental perspective, social inventory accumulation eased the tight supply of zinc ingots, while consumption weakened as downstream enterprises gradually entered the holiday mode. SHFE zinc was also dragged down by LME zinc, and it is expected to fluctuate today.