Overnight trading saw Shanghai zinc futures move upward in a volatile session, with the main contract closing at 26,210.00 yuan per tonne, a modest gain of 1.39%.

On the fundamentals side, SMM data showed that as of October 9, zinc ingot inventories across seven regions stood at 150,200 tonnes, down 200 tonnes week on week.

On October 9, the London Metal Exchange reported that registered zinc warrants totaled 113,050 tonnes, a decrease of 475 tonnes, while cancelled warrants fell by 100 tonnes to 13,800 tonnes. Total zinc inventories came in at 126,850 tonnes, down 575 tonnes.

A zinc smelter in central China began maintenance shutdowns on Friday evening, with the outage expected to last 30 to 35 days and affect roughly 10,000 tonnes of output.

Institutional Views

Minmetals Futures noted that, from an industry standpoint, zinc concentrate port inventories have edged higher recently while factory inventories have fallen further. Domestic treatment charges for zinc concentrate have stabilized after declining, while imported treatment charges have drifted slightly lower. Although operating rates at downstream initial-stage enterprises have slipped at the margin, these domestic firms have been restocking on dips, pushing raw material inventories higher notably. After the sharp drop in zinc prices, the export window closed, and the pace of destocking of domestic zinc ingot social inventories has slowed. On the macroeconomic front, with high interest rates and elevated oil prices, overseas macro pressures persist, and with LME inventories accumulating abroad, zinc prices still face considerable downside risk.

Shenyin Wanguo Futures pointed out that zinc concentrate processing fees remain at low levels, leaving concentrate supply tight in the near term. The National Bureau of Statistics reported a slight month-on-month decline in domestic zinc smelting output. Galvanized sheet inventories tracked by the China Iron and Steel Association remain generally high. Cumulative growth in infrastructure investment turned negative, automobile production and sales along with real estate posted negative growth, and home appliance production schedules declined. With bullish and bearish factors such as Federal Reserve rate hikes and tight mine supply interweaving, zinc prices may fluctuate within a range in the short term. It is advisable to monitor changes in the U.S. dollar, smelting output and downstream demand.