Low Social Inventory Provides Bottom Support for Zinc Prices [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $2,878/mt. At the beginning of the session, LME zinc fluctuated downward around the daily moving average, hitting a low of $2,845/mt. During European trading hours, increased long positions pushed LME zinc to fluctuate upward, reaching a high of $2,886/mt. Entering the night session, the center slightly dipped and fluctuated near the daily moving average, eventually closing higher at $2,874/mt, up by $7/mt or 0.24%. Trading volume decreased to 8,472 lots, while open interest increased by 2,431 lots to 220,000 lots. Overnight, LME zinc recorded a small bearish candlestick, with the KDJ indicator expanding upward. US retail sales in December continued to grow, and the labour market remained fundamentally solid at the start of the year, indicating strong economic demand and further reinforcing the US Fed's cautious stance on interest rate cuts this year. LME zinc maintained a fluctuating trend.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,810 yuan/mt. At the beginning of the session, a tug-of-war between longs and shorts caused SHFE zinc to fluctuate near the daily moving average. Subsequently, increased long positions drove SHFE zinc to fluctuate upward, reaching a high of 23,810 yuan/mt. However, shorts at high levels pressured the center of SHFE zinc downward, eventually closing higher at 23,745 yuan/mt, up by 50 yuan/mt or 0.21%. Trading volume decreased to 68,166 lots, while open interest increased by 1,730 lots to 109,000 lots. Overnight, SHFE zinc recorded a long lower shadow bearish candlestick, with the 5-day moving average forming resistance above. Due to the decline in zinc prices during the week and pre-holiday downstream restocking, SMM social inventory decreased counter-seasonally, providing support for the bottom of zinc prices.