US Fed's Unexpected Hawkish Remarks; LME Zinc Records Three-Day Losing Streak [SMM Zinc Morning Comment Dec 19]

Overnight, the US Fed cut interest rates by 25 basis points as expected, but halved the anticipated number of rate cuts for next year. The US Q3 current account recorded the largest deficit on record. Hamas announced significant progress in ceasefire agreement negotiations in Gaza. The EU is drafting its 16th round of sanctions against Russia. The Central Rural Work Conference proposed orderly advancing the pilot program to extend the second round of land contracts for another 30 years. Two departments announced the optimization of cross-border corporate RMB and foreign currency integrated fund pool pilot policies in 10 provinces and cities. Hong Kong established a task force to promote the development of the gold market. Shenzhen introduced new measures to support artificial intelligence, offering up to 500 million yuan annually in "training power vouchers."

Overnight, LME zinc opened at $3,033/mt. After briefly consolidating around the daily moving average at the start of trading, LME zinc plunged as bulls exited the market, with its center moving below the daily moving average. During European trading hours, it hit a low of $2,988/mt, then fluctuated around $3,005/mt, eventually closing down at $3,001/mt, a decrease of $35.5/mt or 1.17%. Trading volume fell to 8,619 lots, and open interest decreased by 4,398 lots to 230,000 lots. LME zinc recorded a three-day losing streak overnight, with resistance formed by various moving averages above. LME inventory decreased by 1,700 mt to 260,400 mt, down 0.65%, continuing its decline. The US dollar remained strong, and the US Fed's unexpected hawkish remarks on rate cuts pushed LME zinc's center downward.

Overnight, the most-traded SHFE zinc 2502 contract opened at 25,050 yuan/mt. After quickly reaching a high of 25,085 yuan/mt, its center moved below the daily moving average, trading relatively steadily overall. It hit a low of 24,970 yuan/mt during the session and eventually closed down at 25,000 yuan/mt, a decrease of 155 yuan/mt or 0.62%. Trading volume fell to 37,986 lots, while open interest increased by 961 lots to 124,000 lots. SHFE zinc recorded a four-day losing streak overnight, with support provided by the 40-day moving average below. SHFE zinc fluctuated downward overnight as supply-side support weakened. Overall open interest decreased. However, the spot market remained tight, limiting the extent of its decline to some degree.