Domestic Zinc Ingot Stock Continues to Deplete; SHFE Zinc Surges Higher [SMM Morning Comment]

SMM, Sep 13: Gold Continues to Reach New All-Time Highs; US PPI and core PPI MoM both exceeded expectations but previous values were revised down; US initial jobless claims moderately rose to 230,000 last week; The ECB cut rates for the second time this year and lowered GDP growth projections for the next three years while inflation expectations remained unchanged; Around 42% of crude oil production facilities and 53% of natural gas production facilities in the Gulf of Mexico are currently shut down; Both Ukraine and Russia reported that Moscow has begun a counteroffensive in the Kursk region; The US public debt interest payments exceeded $1 trillion for the first time in FY 2024; President Xi Jinping emphasized that all regions and departments should focus on economic tasks in late Q3 and Q4 to achieve the annual economic and social development objectives; Minister of Commerce Wang Wentao will travel to Europe for consultations on the EU's anti-subsidy investigation into Chinese electric vehicles.
Overnight, LME zinc opened at $2786/mt, fluctuated upward after the opening, dipped to $2782/mt initially, and then soared to $2870/mt at the close, ultimately closing up at $2865/mt, a rise of $68/mt, or 2.43%. Trading volume decreased to 13,347 lots, while open interest increased by 410 lots to 236,000 lots. LME zinc recorded a bullish candlestick overnight, with support from the middle Bollinger Band; LME zinc stocks decreased by 300 mt to 232,425 mt, a drop of 0.13%. Market expectations of a US Fed rate cut remained strong, easing concerns over economic slowdown and driving zinc prices higher, with LME zinc continuing to rise.
Overnight, the most-traded SHFE zinc 2410 contract opened at 23,645 yuan/mt, dipped to 23,585 yuan/mt after the opening, and then surged to 23,800 yuan/mt at the close, finally closing up at 23,800 yuan/mt, a rise of 230 yuan/mt, or 0.98%. Trading volume decreased to 54,876 lots, while open interest increased by 189 lots to 81,240 lots. Overnight, the SHFE zinc also recorded a bullish candlestick, with support from the 40-day moving average. SMM reported that the social inventory of zinc ingots fell by 4,200 mt to 113,400 mt WoW on Thursday, indicating ongoing stock depletion. Additionally, the rise in ferrous metals prices supported a slight resumption in galvanizing production this week, coupled with macroeconomic optimism, driving SHFE zinc higher as well.