China Continues Destocking, SHFE Zinc Center Moves Up [SMM Zinc Morning Comment]

SMM, August 13:

Overnight, LME zinc opened at $3,745/mt. It briefly rose early in the session to touch a high of $3,758.5/mt, then fell all the way to a low of $3,697.5/mt during European trading hours, before losses narrowed near the close. It finally closed flat at $3,745/mt. Trading volume increased to 11,288 lots, and open interest increased by 4,236 lots to 254,000 lots. Overnight, LME zinc recorded a doji. US July PPI unexpectedly came in below expectations, inflationary pressure was easing, and expectations for rate hikes weakened. Meanwhile, US-Iran uncertainty increased, LME zinc inventory continued destocking, and capital concentration was high. LME zinc continued to fluctuate at highs. It is expected to mainly consolidate at highs today.

Overnight, the most-traded SHFE zinc 2609 contract opened at 25,615 yuan/mt. It initially consolidated along the daily average line, then bears reduced positions, and SHFE zinc's center shifted higher, touching a high of 25,730 yuan/mt near the close. It finally closed up 125 yuan/mt, or 0.49%, at 25,675 yuan/mt. Trading volume fell to 38,315 lots, and open interest decreased by 1,840 lots to 104,000 lots. Overnight, SHFE zinc recorded a small bullish candlestick. Although macro sentiment was volatile, China continued destocking, and ore tightness and export expectations still provided support. SHFE zinc's center shifted higher, and it is expected to consolidate at highs today.

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