SHFE zinc dips then consolidates to recover, dragged by weaker LME [SMM zinc morning comment]

Overnight, LME zinc opened at $3,906/mt, edged up to $3,920.5/mt in early trading, then drifted lower to $3,840.5/mt before rebounding from lows to close at $3,877.5/mt, down $27/mt, or 0.69%. Trading volume decreased to 18,828 lots, while open interest increased by 4,373 lots to 260,000 lots. On September 2, LME zinc inventory increased by 1,400 mt to 100,525 mt, up 1.41%. Overnight, LME zinc formed a bearish candlestick. Escalating Middle East conflicts pushed oil prices and the US dollar higher, heightening market concerns over inflation and rate hikes, putting nonferrous metals under pressure. Combined with increased bearish positioning, LME zinc's center shifted lower, though low LME inventory and tight nearby supply still provided some support.

Overnight, the SHFE zinc 2610 contract opened at 26,470 yuan/mt, quickly dipped to 26,380 yuan/mt after the open, then consolidated higher to touch 26,615 yuan/mt before closing at 26,520 yuan/mt, down 65 yuan/mt, or 0.24%. Trading volume decreased to 61,060 lots, while open interest decreased by 1,504 lots to 161,000 lots. Overnight, SHFE zinc formed a small bullish candlestick. LME zinc's retreat from highs weighed on SHFE zinc, but tight domestic ore supply and low TCs continued to underpin zinc prices, allowing SHFE zinc to recover after the dip.

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