SHFE zinc prints a bullish candlestick, and is expected to consolidate at highs in the short term [SMM zinc morning comment].

Last Friday, LME zinc opened at $3,757/mt, briefly dipped to $3,752/mt at the start of the session, then drifted higher throughout the session, hitting a high of $3,840/mt during the night session. Although it pulled back slightly near the end, it still stayed high and consolidated, eventually closing at $3,822.5/mt, up $74.5/mt, or 1.99%. Trading volume increased to 16,686 lots, and open interest rose by 1,747 lots to 262,000 lots. On August 21, LME zinc inventory decreased by 1,275 mt to 93,125 mt, a decline of 1.35%. Last Friday, LME zinc recorded a large bullish candlestick, with all moving averages below providing support for the price. LME inventory continued to decline, and the ex-China backwardation structure remained large. Meanwhile, recent concerns over US Treasury buybacks weighed on the US dollar, pushing the US dollar index lower. LME zinc shot up to a four-year high, and prices are expected to stay high in the short term.

Last Friday, the most-traded SHFE zinc 2610 contract opened at 25,950 yuan/mt. At the start of the session, SHFE zinc shot up to a high of 26,120 yuan/mt, then consolidated around the daily average, with a low of 25,895 yuan/mt. It eventually closed at 25,985 yuan/mt, up 275 yuan/mt, or 1.07%. Trading volume decreased to 77,729 lots, while open interest increased by 5,006 lots to 144,000 lots. Last Friday, SHFE zinc recorded a long upper shadow bullish candlestick, with all moving averages below providing support. The strong performance of the ex-China market lifted SHFE zinc, but China's inventory and consumption limited the price increase. Prices are expected to consolidate at highs today.

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