Weak Reality vs Macro Disturbances Zinc Prices Fluctuate at Highs [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $3,372.5/mt, fluctuating around the daily average in early trading. During European trading hours, it reached a high of $3,389.5/mt. Subsequently, as bulls took profits and exited, LME zinc fell, reaching a low of $3,305/mt by the end of the session. It closed down at $3,308/mt, a decrease of $58.5/mt or 1.74%. Trading volume increased to 10,342 lots, while open interest decreased by 3,669 lots to 226,000 lots. LME zinc recorded three consecutive bearish candlesticks, with the center of the daily candlestick moving downward. The US core PPI saw its fastest growth in a year, complicating US Fed monetary policy. Additionally, an unexpected geopolitical conflict in the Middle East over the weekend, leading to the closure of the Strait of Hormuz, caused crude oil and precious metal prices to open higher. This is expected to boost zinc prices; attention should be paid to the evolution of geopolitical risks.

Last Friday, the most-traded SHFE zinc 2604 contract opened at 24,540 yuan/mt. In early trading, SHFE zinc briefly surged to 24,600 yuan/mt before bears added positions, pushing the center down to 24,490 yuan/mt. By the end of the session, the center further declined, reaching a low of 24,405 yuan/mt. It closed down at 24,445 yuan/mt, a decrease of 265 yuan/mt or 1.07%. Trading volume decreased to 63,095 lots, while open interest increased by 4,245 lots to 99,119 lots. SHFE zinc recorded one bearish candlestick, with the middle Bollinger Band providing resistance and the 40-day moving average offering support. Due to a post-Chinese New Year inventory buildup, with smelter inventories also increasing by more than 40,000 mt, market transactions were mainly focused on weak fundamentals before consumption recovered. However, the sudden geopolitical risk over the weekend provided some boost to non-ferrous metals, with zinc prices fluctuating at highs.

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