Strong Bottom Support in Zinc Fundamentals, Limited Downside Expected [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,324/mt. Early in the session, it briefly touched a high of $3,353/mt before stepping lower, hitting an intraday low of $3,248/mt during the European session. Bears then reduced open interest and exited, lifting LME zinc to recover upward and post a “V-shaped” reversal. However, momentum was insufficient, and the center edged down slightly again toward the close. It ultimately closed lower at $3,272.5/mt, down $35/mt, a decline of 1.06%. Trading volume increased to 20,723 lots, while open interest fell by 346 lots to 226,000 lots. Overnight, LME zinc posted five consecutive bearish candlesticks, with the daily candlestick center moving lower. As escalating tensions in the Middle East heightened market concerns over persistent global inflation, the US dollar strengthened, pressuring the broader base metals complex. However, LME zinc inventory continued to decline, and supply concerns under geopolitical risks are expected to provide clear support on the downside for zinc prices.

Overnight, the most-traded SHFE zinc 2604 contract opened at 24,375 $/mt. Early in the session, SHFE zinc fluctuated around the daily average line before plunging to an intraday low of 24,360 yuan/mt, after which the center returned to around the daily average line. It ultimately closed lower at 24,460 yuan/mt, down 165 yuan/mt, a decline of 0.67%. Trading volume decreased to 81,339 lots, while open interest fell by 5,254 lots to 90,222 lots. Overnight, SHFE zinc posted a small bullish candlestick, but the daily candlestick center edged slightly lower. Overnight, zinc prices traded in a narrow range with relatively strong support at the bottom; attention should be paid to macro changes and the recovery in downstream consumption.

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