LME Retreats After Rapid Rise, SHFE Zinc Center Pulls Back [SMM Zinc Morning Comment]

Overnight LME zinc opened at $3,926.5/mt, drifted higher to hit $3,990/mt, then quickly pulled back to a low of $3,890.5/mt before closing at $3,904.5/mt, up $25/mt, or 0.64%. Trading volume increased to 22,497 lots, while open interest fell by 5,990 lots to 255,000 lots. On September 1, LME zinc inventory rose by 1,175 mt to 99,125 mt, up 1.20%. Overnight LME zinc formed a bearish candlestick with a long upper shadow. Global bond markets extended their sell-off, the US dollar and Treasury yields strengthened, and concerns about inflation and interest rates staying high intensified, weighing on base metals.

Overnight SHFE zinc 2610 contract opened at 26,890 yuan/mt, hit its intraday high right at the open, then quickly dropped to 26,535 yuan/mt, rebounded from the low and moved sideways before closing at 26,765 yuan/mt, down 305 yuan/mt, or 1.13%. Trading volume increased to 111,000 lots, while open interest decreased by 7,320 lots to 167,000 lots. Overnight SHFE zinc formed a bearish candlestick. LME zinc's retreat after rapid rise dragged SHFE zinc's center lower, and long liquidation pushed the futures lower; then LME zinc rebounded from its low, and SHFE zinc followed to recover part of the losses.

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