China and the US Reach Agreement on Tariff Reductions, LME Zinc Rises on the Momentum [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $2,668/mt. After briefly dipping to $2,644.5/mt in the early session, bulls increased their positions, driving LME zinc to fluctuate upward throughout the session. It approached a high of $2,717.5/mt during the night session before bulls took profits and exited their positions, causing LME zinc to drop back slightly. It eventually closed up at $2,669/mt, gaining $13.5/mt or 0.51%. Trading volume increased to 12,942 lots, while open interest rose by 1,652 lots to 218,000 lots. Overnight, LME zinc recorded a long upper shadow bullish candlestick, with the 40-day moving average acting as resistance above. Major progress was made in China-US trade negotiations, global stock markets rose, market sentiment improved, and LME zinc followed the upward trend.

Overnight, the most-traded SHFE zinc 2506 contract opened at 22,530 yuan/mt. In the early session, SHFE zinc quickly approached a high of 22,655 yuan/mt before bulls reduced their positions and exited, causing SHFE zinc to fluctuate downward with its center shifting lower to around 22,310 yuan/mt. It eventually closed down at 22,300 yuan/mt, losing 25 yuan/mt or 0.11%. Trading volume decreased to 75,285 lots, while open interest fell by 3,194 lots to 115,000 lots. Overnight, SHFE zinc recorded a long upper shadow bearish candlestick, with the 5-day moving average providing support below. Although a tariff reduction agreement was reached during the overnight China-US Geneva economic and trade talks, improving market sentiment, traders remained cautious overall in their trading. Additionally, on the fundamentals side, with the replenishment of imported zinc ingots, social inventory increased, weakening fundamental support, and zinc prices maintained sideways movement.