Oversupply Pressures SHFE Zinc to Five Consecutive Losses [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,530.5/mt. At the beginning of the session, it fluctuated around the daily moving average. During European trading hours, bulls took profits and exited, pushing LME zinc to a low of $3,503/mt. Subsequently, bears reduced positions, and LME zinc drifted higher during the night session, touching a high of $3,553/mt. At the end of the session, the center shifted below the daily moving average, and it finally closed down at $3,515/mt, down $13/mt or 0.37%. Trading volume decreased to 9,689 lots, and open interest decreased by 2,313 lots to 252,000 lots. Overnight, LME zinc formed a small bearish candlestick, with the 20-day moving average above exerting pressure, and the MACD bearish bar expanded. The market weighed hopes of renewed negotiations on the US-Iran conflict, with the US dollar falling first and then rising. On the fundamentals side, the export window for China's zinc ingots had opened earlier. Some zinc ingots were exported to Southeast Asia, impacting the spot market there to some extent, with spot premiums declining and the center of LME zinc edging lower.

Overnight, the most-traded SHFE zinc 2609 contract opened at 24,415 yuan/mt. During the session, SHFE zinc fluctuated around the daily moving average, dipping to a low of 24,310 yuan/mt and touching a high of 24,430 yuan/mt. At the end, the center shifted below the daily moving average, and it finally closed down at 24,350 yuan/mt, down 40 yuan/mt or 0.16%. Trading volume decreased to 39,085 lots, while open interest increased by 1,571 lots to 98,789 lots. Overnight, SHFE zinc posted its fifth consecutive bearish candlestick, with various moving averages above exerting pressure and the KDJ widening downwards. Amid the off-season consumption, SMM social inventory increased by another 1,300 mt to 269,000 mt, while net imports of refined zinc in June were 3,000 mt, putting significant pressure on zinc prices from above.

Data source statement: Other data, apart from public information, are derived from public information and market communication, processed by SMM based on its internal database models, for reference only and do not constitute any investment advice.