SMM Zinc Market Morning Comment (May 21)

Overnight, LME zinc opened at $3,044/mt, dipping to $3,037.5/mt, then rising to $3,076/mt before closing at $3,135/mt, up $92/mt, an increase of 3.02%. Trading volume increased to 13,652 lots, and open interest increased by 351 lots to 241,000 lots. Overnight, LME zinc recorded a large rise, with the KDJ indicator expanding upwards. LME inventory decreased by 525 mt to 258,850 mt, a drop of 0.20%. The macro bullish sentiment remained relatively high. Despite the continuous hawkish remarks from US Fed officials, the market still anticipated an interest rate cut in September. However, overseas supply was relatively ample as LME inventory stayed at a high level, putting pressure on price upward movement. Caution is advised for a potential fall from highs.

Overnight, the most-traded SHFE 2407 zinc contract opened at 24,255 yuan/mt, hitting a high of 24,935 yuan/mt before closing at 24,805 yuan/mt, an increase of 615 yuan/mt or 2.54%. The trading volume was reduced to 183,000 lots, and the open interest increased by 11,101 lots to 133,000 lots. Overnight, SHFE zinc recorded three consecutive bullish candlesticks, breaking above the upper Bollinger Band. Market sentiment remained relatively positive, with a general rise in the non-ferrous metals sector. However, domestic inventory increased amid weak consumption. In addition, as SHFE zinc deviated too much from fundamentals, caution is advised for potential high-level profit-taking and exit, indicating limited momentum for SHFE zinc.