Fundamentals: Persistent off-season consumption drags SHFE zinc center lower[SMM Zinc Morning Comment]

SMM, July 16:

Overnight, LME zinc opened at $3,590.5/mt, briefly rallied to touch a high of $3,614/mt, then retreated from highs, hitting a low of $3,542.5/mt near the session's end, before finally closing down at $3,551.5/mt, a drop of $27.5/mt or 0.77%. Trading volume increased to 11,473 lots, and open interest decreased by 3,216 lots to 254,000 lots. Overnight, LME zinc formed a bearish candlestick, with support from the 20-day moving average below. Renewed concerns over the demand outlook prompted LME zinc to retreat from highs, but LME zinc ingot inventory continues to decline, and the current low inventory still provides some support for zinc ingot, so LME zinc is expected to maintain a fluctuating trend in the short term.

Overnight, the most-traded SHFE zinc 2609 contract opened at 24,705 yuan/mt, drifted lower throughout the session, touching a high of 24,750 yuan/mt in early trading, then hitting a low of 24,595 yuan/mt near the session's end, before finally closing down at 24,615 yuan/mt, a drop of 190 yuan/mt or 0.77%. Trading volume increased to 34,196 lots, and open interest decreased by 150 lots to 91,819 lots. Overnight, SHFE zinc formed a bearish candlestick. Affected by the movement in the LME market, SHFE zinc also pulled back during the night session. Added to that, from the fundamentals side, domestic spot consumption in China has not shown significant improvement, so SHFE zinc is expected to continue to consolidate.

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