Bears Prevail, LME Zinc Recorded Six Consecutive Declines [SMM Zinc Morning Comment]

Overnight, US May ADP non-farm payrolls recorded the smallest increase since January this year; the US business activity index saw the largest increase in three years; the Bank of Canada initiated the first rate cut among G7 countries; Iran's Revolutionary Guard stated it would respond to Israeli attacks; Li Qiang: Promote more "small, quick, and effective" targeted legislation; May Caixin China Services PMI hit a new high since August 2023. Overnight, LME zinc opened at $2,935.0/mt, initially hitting a high of $2,937.0/mt. It then fluctuated around $2,925.0/mt, and during the European session, bears exerted pressure, causing LME zinc to fluctuate downwards, operating below the average daily line, with prices falling to around $2,860.0/mt, hitting a low of $2,854.0/mt. By the end of the trading session, LME zinc slightly rebounded to around $2,880.0/mt, finally closing lower at $2,881.0/mt, down by $44/mt, or 1.50%, with trading volume increasing to 14,000 lots and open interest decreasing by 1,372 lots to 242,000 lots. Overnight, LME zinc inventory increased by 3,050 tons to 257,650 tons, up by 1.18%. The US dollar strengthened overnight, causing base metals to generally weaken. However, the US May ADP data falling short of expectations provided some support for base metals. Overnight, the most-traded SHFE zinc contract (2407) opened at ¥23,920/mt, initially fluctuating around the average daily line, hitting a high of ¥24,070/mt. Subsequently, longs reduced positions, causing SHFE zinc to fluctuate downwards to around ¥23,845/mt, hitting a low of ¥23,760/mt. By the end of the trading session, longs exerted pressure, causing SHFE zinc to rebound, with prices rising to around ¥24,015/mt, finally closing lower at ¥24,015/mt, down by ¥130/mt, or 0.54%. Trading volume increased to 111,000 lots and open interest decreased by 1,573 lots to 86,000 lots. Macro sentiment has not yet stabilized, causing zinc prices to weakly adjust. However, improved spot transactions may limit its decline, and zinc prices are expected to mainly fluctuate weakly.