Fundamentals mixed, SHFE zinc to move sideways [SMM zinc morning comment]

Overnight, LME zinc opened at $3,897/mt, hitting a high of $3,897/mt right at the open. The price center then moved lower, dipping to $3,821/mt during the session. LME zinc subsequently consolidated and rebounded slightly, but pulled back again near the end of trading, ultimately closing down at $3,851/mt, a decrease of $42.5/mt or 1.09%. Trading volume increased to 15,753 lots, while open interest decreased by 389 lots to 263,700 lots. On September 28, LME zinc inventory increased by 1,875 mt to 123,475 mt, a change of 1.54%. Overnight, LME zinc formed a bearish candlestick with no upper shadow, with prices pulling back below the middle Bollinger Band. Rising oil prices reignited inflation concerns, and with US Fed officials maintaining a hawkish stance, the US dollar index remained relatively firm, exerting some pressure on zinc prices.

Overnight, the most-traded SHFE zinc 2611 contract opened at 26,505 yuan/mt. In early trading, SHFE zinc quickly dipped to 26,415 yuan/mt. Subsequently, bulls added positions, pushing SHFE zinc up to a high of 26,660 yuan/mt. Then, some bulls took profits and exited, causing SHFE zinc to pull back quickly below the daily average line, ultimately closing down at 26,490 yuan/mt, a decrease of 10 yuan/mt or 0.04%. Trading volume decreased to 59,620 lots, while open interest decreased by 2,097 lots to 141,000 lots. Overnight, SHFE zinc formed a small bearish candlestick, with the middle Bollinger Band above exerting pressure. End-use consumption was relatively mediocre, and downstream holidays were extended during the double festival. However, with TCs running at low levels and the LME Cash-3M backwardation structure maintained, SHFE zinc continued to consolidate at highs.

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