TCs Continue to Rise, Limited Upside Room for Zinc Prices [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $2,842/mt. In early trading, bulls increased positions, driving LME zinc upward above the daily moving average. During European trading hours, it peaked at $2,900/mt. Subsequently, with shorts entering and longs closing positions, LME zinc broke below the daily moving average support and continued to decline, hitting a low of $2,838/mt by the session's end. It ultimately closed higher at $2,838.5/mt, up by $1/mt or 0.04%. Trading volume increased to 11,111 lots, and open interest rose by 1,566 lots to 227,000 lots. Last Friday, LME zinc formed a long upper shadow candlestick, with resistance from the 20-day moving average above and support from the 10-day moving average below. On the same day, US January retail sales plunged by 0.9%, marking the largest drop in nearly two years, leading to a jump initially and then pullback in LME zinc.

Last Friday, the most-traded SHFE zinc 2503 contract opened at 24,075 yuan/mt. In early trading, with bulls exiting, SHFE zinc moved downward in a stepwise manner. By the session's end, its center was around 23,720 yuan/mt, with an intraday low of 23,685 yuan/mt. It ultimately closed lower at 23,710 yuan/mt, down by 210 yuan/mt or 0.88%. Trading volume decreased to 90,813 lots, and open interest fell by 2,000 lots to 81,893 lots. Last Friday, SHFE zinc formed a large bearish candlestick, with resistance from the 40-day moving average above and a narrowing KDJ indicator. The jump initially and then pullback in LME zinc weighed on SHFE zinc. Meanwhile, on the fundamentals side, TC continued to rise, and expectations of ample ore supply further strengthened, exerting pressure on zinc prices at high levels.