Continued Increase in China Inventory Put Some Pressure on the Rise of SHFE Zinc [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,316/mt. In early trading, LME zinc fluctuated upward to a high of $3,331.50/mt, then prices fell rapidly. It then rebounded and recovered the losses, but during European trading hours, as bears cut positions, LME zinc quickly dipped to $3,284/mt. During the night session, amid a tug-of-war between longs and shorts, LME zinc gradually recovered the losses and returned above the average price line to fluctuate, finally closing down at $3,314.50/mt, down $1/mt, or 0.03%. Trading volume decreased to 82,887 lots, and open interest increased by 527 lots to 217,000 lots. Overnight, LME zinc recorded a small bearish candlestick with a long lower shadow. The middle Bollinger Bands line above formed resistance, while the 60-day moving average below provided support. As the market remained cautious about the Middle East conflict, the US dollar strengthened, while sticky inflation also hindered the pace of interest rate cuts, dragging the center of LME zinc lower.

Overnight, the most-traded SHFE zinc 2604 contract opened at 24,360 yuan/mt. In early trading, SHFE zinc briefly touched a high of 24,390 yuan/mt, then quickly fell to a low of 24,205 yuan/mt. Thereafter, amid a tug-of-war between longs and shorts, SHFE zinc fluctuated rangebound, finally closing down at 24,240 yuan/mt, down 60 yuan/mt, or 0.25%. Trading volume decreased to 35,766 lots, and open interest increased by 1,359 lots to 74,085 lots. Overnight, SHFE zinc recorded a small bearish candlestick. The middle Bollinger Bands line above formed resistance, while the lower Bollinger Bands line below provided support. As of yesterday (March 12), China social inventory continued to increase to a three-year high. Supply in China was ample, but downstream consumption showed mediocre performance. Fundamentals provided insufficient support for prices, though amid macro uncertainty, prices still found some support at the bottom.

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