Fundamentals Weaken, Limited Rebound Space for Zinc [SMM Morning Comment on Zinc]

Overnight, LME zinc opened at $2,863/mt. At the beginning of the session, LME zinc briefly consolidated around the daily moving average before shorts increased their positions, pushing the center downward to around $2,820/mt, with a low of $2,807.5/mt during the period. During European trading hours, LME zinc rebounded upward, reaching a high of $2,875/mt during the night session, and ultimately closed lower at $2,867/mt, down by $1.5/mt or 0.05%. Trading volume increased to 13,621 lots, and open interest rose by 325 lots to 217,000 lots. Overnight, LME zinc recorded a candlestick with a long lower shadow, with the 10-day moving average forming resistance above. Lower-than-expected consumption data overnight eased market concerns about accelerating inflation, and the US dollar index pulled back, allowing LME zinc to rise accordingly.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,565 yuan/mt. At the beginning of the session, SHFE zinc briefly consolidated before bulls increased their positions, driving prices to fluctuate upward, reaching a high of 23,810 yuan/mt by the end of the session. It ultimately closed lower at 23,790 yuan/mt, down by 10 yuan/mt or 0.04%. Trading volume decreased to 72,873 lots, while open interest increased by 3,326 lots to 105,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the MACD bearish bars narrowing. Overnight, driven by the overseas market, SHFE zinc rebounded from a low level. On the fundamentals side, a northern mine resumed production, increasing supply on the upstream side. In the spot market, as downstream enterprises entered the holiday period, spot premiums quickly pulled back. Zinc prices are expected to have limited upward rebound potential.