US Fed Continues to Face Turmoil as LME Zinc Fluctuates Considerably
Futures: Overnight, LME zinc opened at ,804.5/mt. At the beginning of the session, LME zinc fluctuated around the daily average. During the European trading hours, LME zinc fell below the daily average, reaching a low of ,787.5/mt. Subsequently, with bears reducing positions, LME zinc fluctuated upward, peaking at ,827/mt. Towards the end of the session, LME zinc dropped back slightly and finally closed up at ,807/mt, an increase of .5/mt or 0.05%. Trading volume increased to 73,711 lots, while open interest decreased by 1,817 lots to 191,000 lots. Overnight, the most-traded SHFE zinc 2510 contract opened higher with a gap at 22,310 yuan/mt. At the start of the session, as bears reduced positions, SHFE zinc quickly rose above the daily average, reaching a high of 22,425 yuan/mt. However, with bulls also reducing positions, SHFE zinc fell below the daily average. Subsequently, SHFE zinc fluctuated rangebound around 22,350 yuan/mt, and finally closed up at 22,355 yuan/mt, an increase of 85 yuan/mt or 0.38%. Trading volume decreased to 53,355 lots, while open interest decreased by 602 lots to 108,000 lots.
Macro: It is reported that the Trump administration is considering measures that could impact regional Feds; lawyers for US Fed's Cook have filed a lawsuit over her dismissal by Trump; Trump has promised to soon impose "very high" tariffs on furniture; Trump warned of an "economic war" against Russia while criticizing Ukraine; Trump expressed his desire to visit China soon and issued further tariff threats.
Spot:
Shanghai: The futures maintained a fluctuating trend. There were many traders selling in the market. Spot premiums and discounts remained stable yesterday. Smelters also sold zinc ingots at lower prices. Downstream enterprises' purchasing sentiment did not improve, and transactions continued to be made as needed, with overall trading in the doldrums.
Guangdong: Overall, the center of the futures market declined somewhat yesterday. Some traders reported a slight improvement in terminal procurement demand, and downstream inquiries increased slightly. However, there was still a large amount of spot cargo in the Guangdong market, and inventory continued to increase. Spot premiums and discounts continued to fluctuate in the doldrums.
Tianjin: The futures market was in the doldrums yesterday. Due to environmental protection, the overall purchasing sentiment of downstream enterprises was low, and their purchasing enthusiasm was weak. Traders' sales remained stable, and overall market transactions were moderate.
Ningbo: After some traders sold off their low-priced zinc ingots the day before, there was a strong reluctance to budge on prices among traders yesterday, and spot premiums increased slightly. However, as downstream buyers had already purchased some goods earlier, their purchasing sentiment was not high yesterday, and spot transactions in the market were moderate.
Social Inventory: On August 26, LME zinc inventory decreased by 2,550 mt to 65,525 mt, a decline of 3.75%. According to SMM, as of Monday this week, the total zinc ingot inventory in seven regions monitored by SMM was 138,500 mt, an increase of 3,100 mt from August 18 and 5,600 mt from August 21, indicating an increase in domestic inventory.
Zinc Price Forecast: LME zinc recorded a bullish candlestick overnight, with the 40/60-day moving average providing support below. It is reported that the Trump administration is considering measures affecting regional Feds, and the US dollar index pulled back under the influence of the US Fed turmoil, while overseas inventories continued to decline, both supporting LME zinc to rise. SHFE zinc also recorded a bullish candlestick overnight, with the 60-day moving average providing support below. Driven by the external market, SHFE zinc opened higher with a gap; recently, there has been a slight improvement in export orders for some end-user sectors, coupled with the continuous reduction in overseas inventories, currently, there is still certain support at the bottom of SHFE zinc.
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