LME Zinc Rebounds After Dropping, SHFE Zinc Expected to Consolidate at Highs [SMM Zinc Morning Comment]

Overnight LME zinc opened at $3,880/mt, briefly pulled back in early trading before quickly rising to $3,915/mt, then drifted lower to hit a low of $3,845.5/mt. During the night session, it rebounded from the low and finally closed at $3,897.5/mt, up $20/mt, or 0.52%. Trading volume decreased to 15,156 lots, while open interest increased by 2,024 lots to 262,000 lots. On September 3, LME zinc inventory increased by 9,975 mt to 110,500 mt, up 9.92%. Overnight LME zinc formed a bearish candlestick, while overnight LME zinc also formed a bullish candlestick with a long lower shadow. The US dollar index and US Treasury yields pulled back, easing price pressure on dollar-denominated metals and directly boosting LME zinc. However, stronger-than-expected US services data reinforced rate hike expectations and limited LME zinc's gains. Although inventory surged by 9,975 mt yesterday, tight nearby supply coupled with increased bullish positioning drove futures to recover from the decline.

Overnight SHFE zinc recorded a small bearish candlestick. LME zinc's rebound from lows lifted SHFE zinc's center higher. Tight domestic ore supply, low TCs, and social inventory destocking continued to provide support. However, high prices suppressed downstream purchases, and combined with reduced bullish positioning, gains in futures narrowed. It is expected to continue to consolidate at highs during the day.

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