SHFE Zinc Records a Bearish Candle Without Upper Shadow; SHFE Zinc May Maintain a Fluctuating Trend [SMM Zinc Morning Comment Dec 23] 

Last Friday, the US Fed's preferred inflation indicators were all below expectations; Biden signed an emergency funding bill to prevent a government "shutdown"; reports suggest that 90% of the Gaza ceasefire negotiations have been completed; Trump warned the EU: tariffs will be imposed if US oil and gas are not purchased; Putin stated that Russia is ready to restore relations with the West without compromising its own interests; the Ministry of Commerce is expediting the formulation of next year's policies related to the "program of large-scale equipment upgrades and consumer goods trade-ins"; legislation on the Promotion of Private Economy Law has made further progress; the cap on the proportion of sales of Hong Kong mutual recognition funds to non-residents has been relaxed to 80%; and five cities, including Shenzhen, are advancing non-discriminatory cross-regional housing provident fund services.

Last Friday, LME zinc opened at $2,960/mt and initially fluctuated upward above the daily moving average, reaching a high of $2,997.5/mt. Subsequently, during a period of fluctuating downward movement, LME zinc attempted to rise but continued to decline as bulls reduced positions, hitting a low of $2,949.5/mt. By the end of the session, LME zinc quickly rebounded near the daily moving average and fluctuated along it, ultimately closing higher at $2,972.5/mt, up $2.5/mt or 0.08%. Trading volume decreased to 85,879 lots, and open interest fell by 1,127 lots to 230,000 lots. Last Friday, LME zinc recorded a long upper shadow candlestick, with resistance from various moving averages above and support from the lower Bollinger Band below. LME inventory decreased by 3,400 mt to 254,125 mt, a decline of 1.32%, marking a reduction in LME inventory. Last Friday, US inflation indicators were all below expectations, leading to a pullback in interest rate cut expectations, and the center of LME zinc prices slightly moved downward. With the reduction in LME inventory, LME zinc is expected to maintain a fluctuating trend.

Last Friday, the most-traded SHFE zinc 2502 contract opened at a high of 24,895 yuan/mt, followed by an increase in short positions that drove SHFE zinc to fluctuate downward below the daily moving average, hitting a low of 24,670 yuan/mt. Subsequently, as shorts reduced positions, SHFE zinc fluctuated upward, ultimately closing lower at 24,820 yuan/mt, down 140 yuan/mt or 0.56%. Trading volume decreased to 78,319 lots, while open interest increased by 3,172 lots to 129,000 lots. Last Friday, SHFE zinc recorded a bearish candle without an upper shadow, with resistance from the 5-day and 20-day moving averages above and support from the lower Bollinger Band below. Domestically, the supply-side imbalance slightly eased, weakening support for zinc prices. However, tight spot supply in the market continues to provide support for zinc prices. SHFE zinc is expected to fluctuate upward.