Domestic Inventory Increase, SHFE Zinc Opens Lower With a Gap [SMM Zinc Morning Comment]

Overnight, Trump stated that Putin would accept Europe's deployment of peacekeeping forces to Ukraine, and Ukraine is expected to sign a mining agreement this week or next week. Putin mentioned that Russia and the US could agree on a 50% reduction in armaments and plans to resume aluminum product exports to the US. Macron commented that the mining agreement would help safeguard Ukraine's sovereignty and agreed that Europe would bear the costs and burdens of the Russia-Ukraine conflict. Iraq's oil minister announced that oil exports from the Kurdistan region would resume within a week. Trump confirmed that tariffs on Canada and Mexico would be imposed on schedule. President Xi Jinping remarked that regardless of international changes, China-Russia relations would continue to progress steadily. CSRC Chairman Wu Qing emphasized prioritizing support for technology enterprises focusing on breakthroughs in critical core technologies through equity and debt financing as well as mergers and acquisitions. Tesla is reportedly preparing to deploy FSDw in China.

Overnight, LME zinc opened at $2,915/mt, with its center fluctuating around the daily moving average, reaching a high of $2,926.5/mt. During the European trading session, bears increased positions, driving LME zinc downward to a low of $2,845/mt, and it eventually closed down at $2,845/mt, a decrease of $75/mt or 2.57%. Trading volume increased to 110,000 lots, and open interest rose by 920 lots to 231,000 lots. Overnight, LME zinc recorded a bearish candlestick with no lower shadow, with the 60-day moving average forming resistance above and the 20-day moving average providing support below. LME zinc inventory increased by 7,400 mt to 161,000 mt (4.82%), with overseas inventories also recording an increase. The current international situation remains uncertain, and the rise in overseas inventories has led to a slight downward movement in LME zinc.

Overnight, the most-traded SHFE zinc 2504 contract opened lower with a gap at 23,850 yuan/mt, quickly reaching a high of 23,870 yuan/mt. However, with bears increasing positions, the center of SHFE zinc fluctuated downward below the daily moving average. During this period, a tug-of-war between longs and shorts caused SHFE zinc to briefly fluctuate along the daily moving average before its center oscillated around 23,690 yuan/mt. It eventually closed down at 23,680 yuan/mt, a decrease of 310 yuan/mt or 1.29%. Trading volume decreased to 73,485 lots, while open interest increased by 4,581 lots to 86,443 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 10-day and 60-day moving averages forming resistance above and the lower Bollinger Band providing support below. Domestic inventory also recorded an increase. Although the consumption side has not fully recovered, it is expected to gradually improve over time. In the short term, zinc prices are likely to fluctuate, with macroeconomic developments warranting close attention.