Tug-of-War Between Longs and Shorts, Zinc Prices Maintain Fluctuating Trend [SMM Zinc Morning Comment Dec 16]

Last Friday, the Bank of Japan reportedly considered delaying interest rate hikes; Vladimir Putin stated that Russia was ready for a full-scale counterattack; Israel and Hamas might reach an agreement on the exchange of detainees by the end of this month; the Nasdaq 100 Index announced its annual component adjustment results; China's cumulative increase in social financing scale for the first 11 months reached 29.4 trillion yuan; the China Securities Regulatory Commission emphasized the importance of firmly implementing the key requirement to "stabilize the real estate and stock markets"; Wang Xin, Director of the Research Bureau of the People's Bank of China, stated that RRR cuts and interest rate cuts would be implemented at an appropriate time; the Ministry of Finance announced plans to adopt a more proactive fiscal policy next year.

Last Friday, LME zinc opened at $3,081.5/mt. In the early session, LME zinc briefly consolidated along the daily moving average before its center shifted downward to test a low of $3,060.5/mt. Subsequently, bulls entered at lower levels, pushing LME zinc to fluctuate upward, with its center operating above the daily moving average. During the European trading session, it reached a high of $3,120/mt. Entering the night session, bears entered while longs closed positions, causing the center of LME zinc to shift downward to around $3,090/mt. It eventually closed higher at $3,089.5/mt, up $9/mt or 0.29%. Trading volume decreased to 8,183 lots, and open interest fell by 3,711 lots to 233,000 lots. Last Friday, LME zinc recorded a small bullish candlestick, with resistance from the 5-day and 10-day moving averages above and support from the 20-day moving average below. Overnight, LME inventory decreased by 5,150 mt to 268,550 mt, a decline of 1.88%, marking a reduction in LME inventory. Last Friday, the strengthening US dollar pressured the performance of base metals, but the reduction in LME inventory provided support for LME zinc, which maintained a fluctuating trend.

Last Friday, the most-traded SHFE zinc 2501 contract opened higher at 25,870 yuan/mt. In the early session, shorts entered, suppressing SHFE zinc to fluctuate downward, with its center operating below the daily moving average. After testing a low of 25,725 yuan/mt, its center fluctuated around 25,770 yuan/mt. It eventually closed higher at 25,760 yuan/mt, up 65 yuan/mt or 0.25%. Trading volume decreased to 74,921 lots, while open interest increased by 305 lots to 127,000 lots. Last Friday, SHFE zinc stopped rising and started to fall, with support from the 10-day moving average below, but the MACD bullish bar narrowed. The national policies to stabilize the real estate and stock markets, coupled with loose fiscal and tax policies, kept macro sentiment moderate. Zinc prices fluctuated at highs, but on the fundamentals side, the loose supply weighed on zinc prices, limiting their upward movement.