Zinc Concentrate TCs Rise Significantly, SHFE Zinc Falls Back from Highs [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $2,827/mt, initially dipped to $2,819/mt, then quickly climbed to fluctuate around $2,850/mt, reaching a high of $2,875/mt during the session. Near the close, LME zinc declined and ended higher at $2,842/mt, up by $16.5/mt or 0.58%. Trading volume increased to 11,619 lots, while open interest decreased by 866 lots to 226,000 lots. Last Friday, LME zinc formed a bullish candlestick, with support from the 5-day moving average. LME zinc inventory fell by 2,025 mt to 170,450 mt, a decrease of 1.17%. US January seasonally adjusted non-farm payrolls declined more than market expectations, coupled with the recent continuous decline in LME zinc inventory. Low inventory levels supported LME zinc to fluctuate at highs.

Last Friday, the most-traded SHFE zinc 2503 contract opened at 24,015 yuan/mt, initially touched a high of 24,035 yuan/mt, then trended downward, hitting a low of 23,745 yuan/mt near the close, and finally settled lower at 220 yuan/mt, down by 0.92%. Trading volume decreased to 67,770 lots, while open interest fell by 287 lots to 92,762 lots. Last Friday, SHFE zinc formed a bearish candlestick, with resistance from the 40-day moving average. The zinc ingot inventory buildup pace continued for two weeks after the Chinese New Year, coupled with a significant increase in domestic zinc concentrate TCs in February, weakening the fundamental support for zinc prices. SHFE zinc fell back from highs; however, with the peak season for downstream enterprises resuming production approaching, the subsequent decline in zinc prices is expected to be limited.