Powell’s dovish stance has once again raised expectations for rate cuts. LME zinc fluctuated overnight, rising slightly by 0.10%. Zinc ingot production in July saw a significant decrease, leading holders to firm prices and narrowing the discount. Traders were actively purchasing, pushing up the bottom price of zinc. It is expected that the spot zinc price will rise today.
In the previous week, LME zinc fluctuated widely around the breakeven point. It opened at $2,928.5/ton, hit a high of $2,972, a low of $2,923, and closed at $2,952, up $3, a 0.10% increase. The trading volume was 6,470 lots, down by 1,232 lots, and the open interest was 231,589 lots, down by 3,963 lots. The main Shanghai zinc contract for August 2024 remained firm overnight, closing at 24,405 yuan/ton, up 155 yuan, a 0.64% increase.
Today’s forecast for spot zinc prices: Last night’s dovish remarks by Powell emphasized that the recent three favorable inflation data points increased confidence, indicating that there is no need to wait until it reaches 2% before cutting rates. This significantly boosted market expectations for a rate cut by the Fed in the near term. However, Powell did not convey any specific timing for the rate cut, causing market concerns about potential deception. Although positive news was conveyed at the macro level for the non-ferrous sector, bulls remained relatively cautious, with short-term trading evident. LME zinc fluctuated around the breakeven point overnight, rising slightly by 0.10% to $2,952. Recently, news of mine restarts has been continuously released, but the short-term domestic tight supply situation is still difficult to alleviate. Many large smelters implemented production reduction and maintenance plans in July, leading to a significant decrease in zinc ingot production. Coupled with the general sentiment of holders firming prices near the delivery date, the spot discount narrowed, and traders’ purchasing enthusiasm was decent, supporting the bottom price of zinc. However, since there has been no marginal recovery in demand, the market is waiting for clear policy signals from key domestic meetings. Shanghai zinc opened higher today but then fell back, although still showing an upward trend. It is expected that the spot zinc price will rise today.