China's inventory continues destocking, SHFE zinc keeps rising [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,948/mt, consolidating briefly at the start of the session, during which it dipped to a low of $3,933/mt. Subsequently, as bears reduced positions, LME zinc rallied rapidly, climbing all the way to touch a high of $3,998/mt in the night session. Gains narrowed toward the end of the session, and it finally closed up at $3,989.5/mt, up $49/mt, or 1.24%. Trading volume fell to 11,333 lots, and open interest decreased by 2,585 lots to 262,000 lots. Overnight, the most-traded SHFE zinc 2610 contract opened at 267,110 yuan/mt, dipped briefly in early trading to a low of 27,030 yuan/mt, then rallied rapidly as bulls added positions, touching a high of 27,385 yuan/mt near the end of the session, and finally closed up at 27,340 yuan/mt, up 245 yuan/mt, or 0.90%. Trading volume fell to 71,147 lots, and open interest increased by 5,243 lots to 162,000 lots.

Overnight, LME zinc formed a bullish candlestick. Geopolitical tensions flared up again, and a stronger yen led to a weaker US dollar. Combined with high concentration of LME funds, the center of LME zinc shifted higher. LME zinc is expected to mainly consolidate at highs today. Overnight, SHFE zinc formed a small bullish candlestick. China continued destocking due to exports, TCs kept falling, and supply is tight. Meanwhile, the market still holds certain expectations for the September-October peak season, pushing SHFE zinc higher. SHFE zinc is expected to consolidate at highs today.

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