End-use demand weakens, zinc price rise faces pressure [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $3,420/mt. In early trading, it fluctuated considerably around the daily average line, hitting a high of $3,423.50/mt. During European trading hours, it fell below the daily average line but later recovered the losses and moved back above the daily average line. Towards the close, LME zinc fluctuated downward, touching a low of $3,336.5/mt, and finally closed down at $3,370/mt, a decrease of $83/mt, or 2.40%. Trading volume increased to 142,000 lots, and open interest rose by 5,365 lots to 239,000 lots. On January 30, LME zinc inventory increased by 250 mt to 110,000 mt, up 0.23%. Last Friday, LME zinc recorded a bearish candlestick, with support from the 10-day and 40-day daily average lines below. Nonferrous metals generally fell last Friday. Meanwhile, after US President Trump announced former Fed Governor Warsh as the candidate for the next Fed Chairman, the US dollar index strengthened significantly, and the center of LME zinc moved downward.

Last Friday, the most-traded SHFE zinc 2603 contract opened at 25,735 yuan/mt. In early trading, it fell to a low of 25,520 yuan/mt. Subsequently, short-covering by bears pushed it up above the daily average line, reaching a high of 25,905 yuan/mt. Towards the close, it maintained a fluctuating trend and finally closed down at 25,775 yuan/mt, a decrease of 60 yuan/mt, or 0.23%. Trading volume decreased to 172,000 lots, and open interest fell by 3,467 lots to 102,000 lots. According to SMM communications, as of last Thursday (January 29), domestic zinc ingot inventory increased. Last Friday, SHFE zinc recorded a small bullish candlestick, with support from the 10-day and 40-day daily average lines below. The number of enterprises on holiday in the zinc downstream sector gradually increased, trading in spot markets across regions was sluggish, and end-use consumption weakened. It is expected that SHFE zinc will hover at highs in the short term, with some resistance to further rises.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.