Fundamental Disturbances Increase, LME Zinc Fluctuates at Highs [SMM Zinc Morning Comment Oct 23]

Overnight, the IMF projected global economic growth rates of 3.2% for this year and next, with downside risks becoming more significant; the US Fed's overnight reverse repo operations usage fell to its lowest since 2021; sources said Israel is considering a two-week ceasefire with Hamas; the Israeli military claimed that the successor to Hezbollah leader Nasrallah is dead; the National Development and Reform Commission stated that nearly half of the incremental policies have been implemented, with another batch "on the way"; the State Administration of Foreign Exchange noted that since late September, foreign investors' willingness to allocate RMB assets has further increased; a report from the Institute of Finance of the Chinese Academy of Social Sciences suggested issuing 2 trillion yuan of special government bonds to support the establishment of a stock market stabilization fund; several industry insiders mentioned that some banks have already suspended "high-interest high-return" auto finance businesses.

Overnight, LME zinc opened at $3,063/mt. After a brief consolidation around the daily moving average at the beginning of the session, increased long positions pushed LME zinc to climb stepwise, operating above the daily moving average. By the end of the session, the focus shifted upwards to around $3,135/mt, peaking at $3,143/mt, and finally closing up at $3,142.5/mt, an increase of $81/mt or 2.65%. Trading volume decreased to 9,268 lots, and open interest increased by 1,542 lots to 254,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the middle Bollinger Bands providing support below. Overnight, LME inventory decreased by 2,550 mt to 234,625 mt, a drop of 1.08%, continuing the reduction trend. Recently, a fire at the Century mine in Australia halted production, expected to affect around 10,000 mt in metal content, increasing supply-side disturbances and causing zinc prices to fluctuate at highs.

Overnight, the most-traded SHFE zinc 2412 contract opened at 25,120 yuan/mt. At the beginning of the session, SHFE zinc quickly peaked at 25,215 yuan/mt, then, with short positions entering and long positions closing, SHFE zinc's focus shifted downwards, hitting a low of 25,005 yuan/mt. By the end of the session, shorts exited, and SHFE zinc recorded a V-shaped reversal, finally closing up at 25,125 yuan/mt, an increase of 205 yuan/mt or 0.82%. Trading volume decreased by 39,966 lots, and open interest increased by 2,301 lots to 95,376 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with various moving averages providing support below. A domestic northern mine halted production, coupled with the upcoming seasonal off-season, increasing disturbances on the mining end. The expected limited upward space for TC provides support for the bottom of zinc prices.