Report Overview - The report is an early morning report on Shanghai zinc futures on July 28, 2025, released by the Investment Consulting Department of Dayue Futures [1] Report Industry Investment Rating - Not mentioned in the report Core Viewpoints - The previous trading day saw Shanghai zinc oscillate and decline, with shrinking trading volume and both long and short positions reducing, more so for the long - side. The market may oscillate and decline in the short - term. Technically, the price is above the long - term moving average with strong support. The short - term KDJ indicator is declining in the overbought area, while the trend indicator shows increasing long - side strength and decreasing short - side strength. It is recommended that Shanghai zinc ZN2509 will oscillate and decline [20] Summary by Relevant Catalogs Fundamental Analysis - In April 2025, global zinc plate production was 1.153 million tons and consumption was 1.1302 million tons, with a surplus of 22,700 tons. From January to April, production was 4.4514 million tons and consumption was 4.5079 million tons, with a shortage of 56,500 tons. From January to April, global zinc ore production was 4.0406 million tons, which is a positive factor [2] Basis Analysis - The spot price is 22,830, and the basis is - 55, indicating a neutral situation [2] Inventory Analysis - On July 25, LME zinc inventory decreased by 1,125 tons to 115,775 tons compared to the previous day, and SHFE zinc inventory warrants increased by 1,349 tons to 13,289 tons compared to the previous day, a neutral situation [2] Futures Market Analysis - On July 25, for different delivery months of zinc futures, prices generally declined. For example, the 2509 contract had a settlement price of 22,980, an opening price of 22,925, a high of 22,935, a low of 22,755, and a closing price of 22,885, with a decline of 95 in one measure and 135 in another [3] Spot Market Analysis - On July 25, in the domestic spot market, the price of zinc concentrate in Chenzhou was 17,400 yuan/ton (down 70 yuan/ton), zinc ingots in Shanghai were 22,830 yuan/ton (down 80 yuan/ton), galvanized sheets in China were 4,089 yuan/ton (up 10 yuan/ton), and galvanized pipes in China were 4,457 yuan/ton (up 19 yuan/ton) [4] Inventory Statistics - From July 14 to July 24, 2025, the total social inventory of zinc ingots in major Chinese markets increased from 74,200 tons to 80,800 tons. Compared with July 17, it increased by 6,600 tons, and compared with July 21, it increased by 5,400 tons [5] Zinc Concentrate Processing Fee - On July 25, the zinc concentrate processing fees in different regions remained relatively stable. For example, in Fift alle, the processing fee for 50% zinc concentrate was 3,700 - 3,900 yuan/metal ton, with an average of 3,800 yuan/metal ton [17] Member Trading and Position Ranking - For the zn2509 contract on July 25, in terms of trading volume, Guotai Junan had the highest volume of 55,468, an increase of 5,329 compared to the previous day. In terms of long positions, CITIC Futures held 24,115, a decrease of 18. In terms of short positions, CITIC Futures held 11,500, an increase of 748 [18]

Report Summary 1. Investment Rating - Unilateral: Cautiously bearish [4] - Arbitrage: Neutral [4] 2. Core View - The spot premium of zinc continues to weaken. With sufficient raw material reserves downstream, positive US macro - data, and rising commodity prices, pressure on zinc premium will continue. The supply surplus expectation remains unchanged in the second half of the year due to increasing import ore TC, rising zinc concentrate production, and high domestic smelting profits. Although downstream consumption shows some resilience, it cannot offset the high growth on the supply side, leading to a continuous inventory build - up trend [3]. 3. Key Data Summary Spot Market - LME zinc spot premium is -$8.95 per ton. SMM Shanghai zinc spot price rose by 60 yuan/ton to 22,110 yuan/ton, with the premium down 10 yuan/ton to 20 yuan/ton. SMM Guangdong zinc spot price rose by 60 yuan/ton to 22,030 yuan/ton, with the premium down 10 yuan/ton to - 60 yuan/ton. SMM Tianjin zinc spot price rose by 70 yuan/ton to 22,070 yuan/ton, with the premium unchanged at - 20 yuan/ton [1]. Futures Market - On July 17, 2025, the SHFE zinc main contract opened at 21,975 yuan/ton and closed at 22,130 yuan/ton, up 115 yuan/ton. Trading volume was 77,512 lots, down 11,957 lots from the previous day, and positions were 67,223 lots, down 11,088 lots. The intraday price fluctuated between 21,970 yuan/ton and 22,170 yuan/ton [1]. Inventory - As of July 17, 2025, SMM's seven - region zinc ingot inventory was 93,500 tons, up 3,200 tons from last week. LME zinc inventory was 121,475 tons, up 125 tons from the previous day [1][2]. 4. Market Analysis - Spot market: The spot premium is weakening. Sufficient downstream raw material reserves and positive US macro - data will continue to pressure the zinc premium. - Cost side: Import ore TC is rising. Vedanta's Q2 report shows a 7% year - on - year increase in zinc concentrate production. High domestic smelting profits and sufficient raw material inventory of smelters lead to low procurement enthusiasm. - Consumption side: Downstream operating rates show resilience, but cannot offset the high growth on the supply side. Social inventory is increasing, and the inventory build - up trend is expected to continue in the second half of the year [3].

1. Report Industry Investment Rating - No information provided in the report. 2. Core Viewpoints of the Report - The fundamentals of zinc show that in April 2025, the global zinc sheet production was 1153000 tons, consumption was 1130200 tons, with a surplus of 22700 tons; from January to April, production was 4451400 tons, consumption was 4507900 tons, with a shortage of 56500 tons. The base - point is neutral, inventories are declining (LME and SHFE), the market is in a long - position - dominated situation, and the expected trend of zinc futures ZN2508 is to oscillate and decline [2]. - The previous trading day saw Shanghai zinc oscillate and decline, with increased trading volume, long - position reduction, and short - position increase. Technically, prices are above long - term moving averages, short - term indicators KDJ are declining, and the bullish power is decreasing while the bearish power is increasing. It is expected to oscillate and decline in the short term [20]. 3. Summary by Relevant Catalogs 3.1 Zinc Futures Market Conditions - On July 1, 2025, the zinc futures of various delivery months on the futures exchange generally showed a downward trend. For example, the contract 2507 had a previous settlement price of 22490, a closing price of 22315, a decline of 175; the contract 2508 had a previous settlement price of 22435, a closing price of 22255, a decline of 180 [3]. 3.2 Spot Market Conditions - On July 1, 2025, the prices of various zinc - related products in the domestic spot market mostly declined. For example, zinc concentrate in Shuwai Village was priced at 17180 yuan/ton, down 170 yuan/ton; zinc ingots in Shanghai were priced at 22300 yuan/ton, down 210 yuan/ton [4]. 3.3 Zinc Ingot Inventory Statistics - From June 5 to June 30, 2025, the total inventory of zinc ingots in major domestic markets increased from 58300 tons to 61800 tons. Compared with last Thursday, it increased by 2800 tons; compared with last Monday, it increased by 3600 tons [5]. 3.4 Zinc Warehouse Receipt Report - On July 1, 2025, the zinc warehouse receipts in the futures exchange showed a decrease. For example, the SHFE zinc warehouse receipts decreased by 253 tons to 6824 tons [2]. 3.5 LME Zinc Inventory Distribution - On July 1, 2025, the LME zinc inventory decreased by 2575 tons to 114900 tons [2][8]. 3.6 Zinc Concentrate Price Summary - On July 1, 2025, the prices of zinc concentrates in major domestic cities were around 17000 - 17200 yuan/ton, with a decline of 170 yuan/ton [9]. 3.7 Zinc Ingot Smelter Price Quotes - On July 1, 2025, the prices of zinc ingots from major domestic smelters mostly declined. For example, the price of 0 zinc ingots from Yunnan Chihong Zinc & Germanium was 22010 yuan/ton, down 270 yuan/ton [13]. 3.8 Domestic Refined Zinc Production Statistics - In May 2025, the production of refined zinc was 422500 tons, a month - on - month decrease of 6.19%, a year - on - year decrease of 9.74%, and a 4.86% decrease compared with the planned value. The capacity utilization rate was 78%, and the planned production in June was 453700 tons [15]. 3.9 Zinc Concentrate Processing Fee Quotes - On July 1, 2025, the domestic zinc concentrate processing fees were mostly in the range of 3200 - 3900 yuan/metal ton, and the import processing fee was 50 US dollars/kiloton [17]. 3.10 Shanghai Futures Exchange Member Zinc Trading and Position Ranking - For the contract zn2508 on July 1, 2025, in terms of trading volume, Guotai Junan ranked first with 52153 lots, a decrease of 15329 lots compared with the previous trading day; in terms of long positions, CITIC Futures ranked first with 13533 lots, an increase of 705 lots; in terms of short positions, CITIC Futures ranked first with 13802 lots, a decrease of 964 lots [19].

Supply Overview - In April 2025, global zinc mine production reached 1.0722 million tons, marking a year-on-year increase of 7% and a month-on-month increase of 6.4% [1] - From January to April 2025, global zinc mine production totaled 4.0406 million tons, with a cumulative year-on-year growth of 2% [1] - Major overseas mines reported varying production levels in Q1, with total output from these mines amounting to 869,000 tons, reflecting a year-on-year increase of 5.5% but a month-on-month decrease of 1.5% [1][2] - Domestic zinc concentrate production in Q1 saw a year-on-year increase of 6.42% [1] Demand Overview - In April, global zinc consumption was 1.1302 million tons, showing a year-on-year increase of 1% and a month-on-month increase of 6% [3] - The downstream consumption index for zinc fell to 56.36% in May, a decrease of 1.7 percentage points, indicating a slowdown in demand [3] - The PMI for various downstream industries, including galvanizing and die-casting, showed values below 50, indicating contraction in these sectors [3] Price and Profitability Insights - The main zinc contract on the Shanghai Futures Exchange faced pressure at the 23,000 yuan/ton level, with a recent low of 21,660 yuan/ton [1] - Domestic zinc concentrate producers are experiencing significant losses, with import losses reaching up to -572 yuan/ton, leading to a closure of import windows [1][2] - Despite the losses, domestic production profits remain substantial, estimated between 3,900 to 4,600 yuan/ton [1] Inventory and Market Dynamics - As of June 24, LME zinc inventories decreased by 49% year-on-year to 123,000 tons, with a month-on-month decline of 18% [4] - The Shanghai Futures Exchange's zinc warehouse receipts fell by 91% year-on-year to 7,471 tons, indicating a tightening supply [4] - Domestic zinc ingot inventory stood at 58,400 tons, reflecting a year-on-year decrease of 7% [4] Future Outlook - The combination of increased global zinc concentrate supply and seasonal demand weakness is expected to suppress zinc prices [5] - However, refining zinc prices may find support from smelting costs, import costs, and ongoing inventory reductions [5] - Potential positive developments in US-China tariff negotiations and a gradual recovery from the consumption off-season could lead to a rebound in zinc prices [5]

Report Summary 1. Report Industry Investment Rating - Unilateral: Neutral [4] - Arbitrage: Neutral [4] 2. Core View of the Report - The spot market's restocking enthusiasm is low before the Dragon Boat Festival. Strong current consumption supports the zinc price to oscillate at a high level, but consumption may face a test in June, and there is a possibility of a month - on - month decline after June. Attention should be paid to inventory changes [1][3] 3. Summary by Related Catalogs Important Data - **Spot**: LME zinc spot premium is -$20.27/ton. SMM Shanghai zinc spot price is flat at 22,830 yuan/ton compared with the previous trading day, and the premium is up 25 yuan/ton to 440 yuan/ton. SMM Guangdong zinc spot price is down 10 yuan/ton to 22,850 yuan/ton, and the premium is up 15 yuan/ton to 460 yuan/ton. SMM Tianjin zinc spot price is flat at 22,840 yuan/ton, and the premium is up 25 yuan/ton to 450 yuan/ton [1] - **Futures**: On May 29, 2025, the main SHFE zinc contract opened at 22,300 yuan/ton and closed at 22,495 yuan/ton, up 135 yuan/ton from the previous trading day. The trading volume was 184,818 lots, an increase of 22,593 lots from the previous trading day. The position was 119,380 lots, a decrease of 3,627 lots from the previous trading day. The intraday price fluctuated, with the highest reaching 22,530 yuan/ton and the lowest 22,225 yuan/ton [1] - **Inventory**: As of May 29, 2025, the total inventory of zinc ingots in seven regions monitored by SMM is 75,000 tons, a decrease of 5,400 tons compared with the same period last week. As of May 29, 2025, the LME zinc inventory is 141,375 tons, a decrease of 2,075 tons from the previous trading day [2] Market Analysis - **Spot Market**: Traders continue to hold up prices, and the spot premium rises. The absolute price fluctuates, which does not meet the downstream's psychological expectations, so the pre - festival restocking enthusiasm is poor [3] - **Supply**: A zinc smelter in South China extended its maintenance due to an accident, and the specific resumption time is undetermined, which caused the zinc price to fluctuate and rise, but the rise lacks continuous power. The overseas mine output in the first quarter was lower than expected, but domestic smelters have sufficient raw material inventory. The TC in June will continue to rise, and smelting still makes a profit at the current TC price, so the supply pressure remains [3] - **Consumption**: The strong current consumption supports the zinc price to oscillate at a high level. Consumption may face a test in June. Since the time window for rush - exporting is approaching the end and there is an over - drafting situation, consumption may weaken month - on - month after June [3]

Core Viewpoint - The zinc market has been experiencing low-level fluctuations for nearly two months, with a focus on whether the supply from mines can meet demand in the future [2][7]. Group 1: Market Dynamics - Since early April, zinc has faced widespread selling due to escalating international trade tensions, remaining below 22,500 points [2]. - Recent maintenance at zinc smelting plants has been higher than usual, despite stable processing fees for zinc ore [3][4]. - A significant zinc smelting plant in southern China extended its maintenance period, impacting production by an estimated 20,000 to 40,000 tons, which led to a price increase [3]. Group 2: Supply and Demand Factors - The decline in social zinc inventory continues, although the demand from downstream sectors remains resilient [5]. - The real estate sector's weakness has slowed the destocking of galvanized inventory, with new construction area starting in the first four months of 2025 down 23.8% year-on-year [5]. - Domestic zinc imports have reached historical highs, contributing to a stable supply environment for smelting plants [7][8]. Group 3: Future Outlook - The mid-term outlook suggests increasing pressure on zinc supply due to the resumption of production at smelting plants and the seasonal slowdown in demand [7]. - Analysts predict that the zinc market may experience a shift towards a bearish trend as supply begins to outpace demand, with expectations of inventory accumulation starting in mid-June [7][8]. - The processing fees for zinc ore are expected to remain strong in the third quarter due to high demand, despite an anticipated oversupply of zinc ingots [8].

Core Viewpoint - Zinc prices have been fluctuating within a range following a significant drop due to tariff announcements, with domestic zinc prices hovering between 21,900-22,800 CNY/ton and LME zinc prices around 2,700 USD/ton, influenced by macroeconomic sentiments rather than strong fundamental pressures [2][8]. Macroeconomic Factors - The US-China trade talks made significant progress in mid-May, with both sides agreeing to suspend additional tariffs for 90 days. However, the US has threatened to impose a 50% tariff on the EU starting June 1, causing short-term volatility in financial markets [3]. - The bond market is showing signs of panic, with Japan's 20-year bond auction underperforming and Moody's downgrading the US credit rating, leading to a decline in the US dollar, US bonds, and US stocks simultaneously [3]. - China's social financing and M2 growth rates are stable, but new RMB loan data is disappointing, indicating a potential slowdown in key economic indicators [3]. Supply Side Dynamics - Global zinc mine production reached 1.0184 million tons in March, a month-on-month increase of 10.2% and a year-on-year increase of 2.6%. The cumulative production from January to March was 2.902 million tons, up 3.75% year-on-year [4]. - China's zinc concentrate production in April was 297,700 tons, a month-on-month increase of 4.5% but a year-on-year decrease of 6.6%. Zinc ore imports surged to 494,700 tons in April, a 37.6% month-on-month increase and a 72.6% year-on-year increase [4]. - Domestic smelters are experiencing a rise in processing fees due to ample supply from both imported and domestic sources, with processing fees for domestic zinc concentrate averaging 3,650 CNY/ton in June [4]. Production Stability - Global refined zinc production in March was 1.1219 million tons, a month-on-month increase of 9.7% but a year-on-year decrease of 3.9%. China's refined zinc production in April was 576,000 tons, a slight decrease from March but a year-on-year increase of 0.3% [5]. - The profitability of smelters has improved, with production losses remaining below 500 CNY/ton, leading to expectations of increased production in the near future [5]. Inventory Levels - Domestic refined zinc inventories are gradually declining, with SMM's seven-city zinc ingot inventory at 80,400 tons as of May 22, which is low compared to previous years [6]. - LME zinc inventories have also seen a slight increase but remain at a low level, which may provide some support for zinc prices [6]. Demand Trends - Demand is showing signs of weakening as the peak season ends, with the operating rate of galvanizing enterprises recovering to around 62%, while die-casting zinc alloy enterprises have seen a drop to 56.41% [7]. - The construction sector remains stable, with a narrowing year-on-year decline in new housing starts and steady growth in infrastructure investment [7]. - However, production in the white goods sector has seen limited growth, with significant declines in refrigerator and television production [7]. Summary - Overall, the impact of tariffs is diminishing, and a weaker dollar is providing some support for non-ferrous metals. Despite low inventories providing price support, the expectation of increased supply against weak demand suggests that zinc prices may struggle to rise significantly in the short term, likely remaining in a weak oscillation [8][9].

Report Summary 1. Report Industry Investment Rating - Unilateral: Neutral [4] - Arbitrage: Neutral [4] 2. Core View - The spot market premium in most regions is weakening, and downstream demand remains cautious due to high prices. Although overseas mine production in Q1 was lower than expected, the surplus expectation of zinc ingots remains unchanged. There is still profit in smelting, and supply pressure persists. Consumption in May may face challenges, and attention should be paid to inventory changes [3]. 3. Summary by Related Catalogs Spot and Futures Market - **Spot**: LME zinc spot premium is -$29.83/ton. SMM Shanghai zinc spot price rose by 150 yuan/ton to 22,760 yuan/ton, with the premium falling by 25 yuan/ton to 205 yuan/ton. SMM Guangdong zinc spot price rose by 200 yuan/ton to 22,700 yuan/ton, with the premium rising by 25 yuan/ton to 145 yuan/ton. SMM Tianjin zinc spot price rose by 150 yuan/ton to 22,740 yuan/ton, with the premium falling by 25 yuan/ton to 185 yuan/ton [1]. - **Futures**: On May 21, 2025, the Shanghai zinc main contract opened at 22,530 yuan/ton and closed at 22,580 yuan/ton, up 160 yuan/ton from the previous trading day. The trading volume was 98,502 lots, an increase of 3,796 lots, and the position was 67,175 lots, a decrease of 9,455 lots. The intraday price fluctuated between 22,510 - 22,675 yuan/ton [1]. Inventory - As of May 19, 2025, the total inventory of SMM seven - region zinc ingots was 83,800 tons, a decrease of 1,700 tons from the same period last week. As of May 21, 2025, LME zinc inventory was 157,875 tons, an increase of 1,150 tons from the previous trading day [2]. Market Analysis - In the spot market, inventories in Guangdong are continuously declining, while premiums in other regions are weakening. After the rebound of absolute prices, downstream buyers are still hesitant due to high prices and make inquiries and purchases based on rigid demand. Overseas mine production in Q1 was lower than expected, but the surplus expectation of zinc ingots remains unchanged. Although the increase in TC is limited, smelting still has profits, and the supply pressure persists. Domestic imported ore inventory is sufficient, and domestic ore TC is still rising. Consumption in May may face challenges, and there is a possibility of a sequential decline in consumption after May [3].