LME drags SHFE zinc lower [SMM zinc morning comment]

Overnight LME zinc opened at $4,058/mt, briefly rose to a high of $4,064.5/mt in early trading, then bulls reduced positions, sending LME zinc lower throughout the session. It dipped to a low of $3,851/mt near the close, ultimately settling down at $3,855/mt, down $209/mt, or 5.04%. Trading volume increased to 24,764 lots, while open interest fell by 3,212 lots to 261,000 lots. Overnight the most-traded SHFE zinc 2610 contract opened at 27,080 yuan/mt, edged up in early trading to a high of 27,090 yuan/mt, then bulls reduced positions, sending SHFE zinc lower throughout the session. It dipped to a low of 26,750 yuan/mt near the close, ultimately settling down at 26,760 yuan/mt, down 715 yuan/mt, or 2.60%. Trading volume fell to 115,000 lots, while open interest decreased by 13,251 lots to 133,000 lots.

Overnight LME zinc formed a large bearish candlestick. PPI rising more than expected boosted expectations for a US Fed rate hike next week, the US dollar index moved higher, expectations of domestic export shipments to delivery warehouses fermented, and combined with changing expectations on copper tariffs, base metals broadly fell, with LME zinc plunging. LME zinc is expected to consolidate today. Overnight SHFE zinc also formed a large bearish candlestick. Macro sentiment turned bearish, and the plunge in LME zinc dragged SHFE zinc lower, but supply remains tight, limiting the downside for SHFE zinc. SHFE zinc is expected to consolidate today.

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