Domestic Social Inventory Hits a Nearly Three-Year High, Zinc Prices Encounter Resistance [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,330/mt. In early trading, LME zinc fluctuated around the daily average line; subsequently, as bulls reduced open interest and exited, LME zinc fluctuated downward throughout the session, trading below the daily average line. Toward the close, the center moved down to around $3,235/mt, and it finally closed down at $3,230/mt, down $89/mt, a decline of 2.68%. Trading volume increased to 14,767 lots, and open interest decreased by 2,819 lots to 220,000 lots. Overnight, LME zinc posted a large bearish candlestick; above, the middle band of the Bollinger Bands formed resistance, while below, the 60-day moving average provided support. As the Middle East conflict escalated, the US dollar strengthened, and oil prices hit a new high since July of the year before last; inflation expectations rose, and expectations for US Fed interest rate cuts within the year were revised down again. Base metals broadly fell, and the center of zinc prices moved down.

Overnight, the most-traded SHFE zinc 2604 contract opened at 24,400 yuan/mt. In early trading, after a brief consolidation around the daily average line, SHFE zinc traded below the daily average line; toward the close, the center continued to edge lower, and it finally closed down at 24,180 yuan/mt, down 465 yuan/mt, a decline of 1.89%. Trading volume decreased to 68,346 lots, while open interest increased by 4,355 lots to 86,966 lots. Overnight, SHFE zinc posted a small bearish candlestick; above, the 5-day moving average formed resistance, while below, the 60-day moving average provided support. Overnight, base metals broadly fell; meanwhile, with a slow recovery in consumption on the fundamentals side, social inventory increased again, putting the upside room for zinc under pressure.

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