Domestic Trading Weakens as Chinese New Year Approaches, SHFE Zinc Center Shifts Lower [SMM Zinc Morning Comment]

SMM Feb. 11:

Overnight, the LME zinc contract opened at $3,392/mt. At the beginning of the session, with bulls and bears intertwined, LME zinc briefly pulled back to a low of $3,368.5/mt. Subsequently, as bulls increased their positions, LME zinc fluctuated upward, touching a high of $3,458.5/mt during the night session. However, due to insufficient upward momentum, its price center pulled back, and it finally closed up at $3,418/mt, gaining $20/mt, an increase of 0.59%. Trading volume rose to 10,803 lots, and open interest increased by 4,800 lots to 235,000 lots. Overnight, LME zinc formed a bullish candlestick with a long upper shadow. Strong non-farm payrolls data prompted the market to scale back bets on US Fed interest rate cuts, but continued destocking in LME inventories still provided support for LME zinc. LME zinc is expected to fluctuate at highs today.

Overnight, the most-traded SHFE zinc 2604 contract opened at 24,780 yuan/mt. At the beginning of the session, SHFE zinc briefly rose to touch a high of 24,800 yuan/mt. Afterwards, as bears increased their positions, SHFE zinc fluctuated downward, probing a low of 24,510 yuan/mt towards the end of the session, and finally closed down at 24,535 yuan/mt, falling 105 yuan/mt, a decrease of 0.43%. Trading volume decreased to 26,540 lots, while open interest increased by 2,781 lots to 81,650 lots. Overnight, SHFE zinc formed a small bearish candlestick. Weakened overseas expectations for interest rate cuts led to a fading macro impact, coupled with cooling domestic trading, causing the price center of SHFE zinc to move downward. SHFE zinc is expected to experience wide swings.

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