China mines resume production; SHFE zinc continues to consolidate at lows [SMM zinc morning comment]

SMM, September 17:

Overnight, LME zinc opened at $3,827/mt and drifted higher after the open, touching an intraday high of $3,866.5/mt. It then pulled back steadily from highs, dipping to $3,801.5/mt near the end of the session before closing down at $3,810.5/mt, down $21/mt or 0.55%. Trading volume fell to 13,776 lots, and open interest decreased by 27 lots to 267,000 lots. Overnight, LME zinc formed a bearish candlestick, with the 20-day moving average above acting as resistance. LME zinc inventory has continued to build recently, and the LME zinc 0-3 backwardation structure pulled back to $88.37/mt, easing structural risks somewhat. Combined with strong wait-and-see sentiment ahead of the US Fed meeting, LME zinc maintained a fluctuating trend overall.

Overnight, the most-traded SHFE zinc 2611 contract opened at 26,155 yuan/mt. In early trading, SHFE zinc dipped to 26,100 yuan/mt, then slowly drifted higher, touching an intraday high of 26,225 yuan/mt. It then stabilized at highs and consolidated, eventually closing down at 26,185 yuan/mt, down 115 yuan/mt or 0.44%. Trading volume fell to 36,431 lots, while open interest rose by 92 lots to 126,000 lots. Overnight, SHFE zinc formed a bullish candlestick, with the 60-day moving average above acting as resistance. LME zinc price trends continued to drag on SHFE, and on the fundamentals side, production resumptions at Zhongjin Lingnan mines added supply growth, while downstream consumption overall has yet to show clear improvement. SHFE zinc is expected to continue consolidating at lows in the short term.

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