SMM morning comment (Feb 23): LME zinc fell back from highs due to macro headwinds

LME zinc opened at $2,399.5/mt on Wednesday, and reached a high of $2,419/mt after dropping to $24384.5/mt, but finally closed down $7/mt or 0.29% at $2,391.5/mt. Trading volume decreased to 7,561 lots. Open interests dipped by 1,653 lots to 239,000 lots. Overnight LME zinc stocks dropped by 400 mt or 0.15% to 268,700 mt. Less people filing for unemployment benefits in the US last week unveiled bullish labor market, thus little likelihood of interest rate cuts by the Fed in H1 2024.

The most-traded SHFE zinc contract opened at a low of 20,385 yuan/mt overnight, and finally closed down 25 yuan/mt or 0.12% at 20,320 yuan/mt. Trading volume decreased to 30,633 lots. Open interests hiked by 3,319 lots to 114,000 lots. SHFE zinc prices gained supports from the 5-day moving average. With bears and bulls in a deadlock, SHFE zinc moved rangebound. Given pick-up of demand next week, zinc prices might go up.