Zinc Price Center Shifted Downward, but Low TCs Limited the Decline [SMM Zinc Morning Comment]

Overnight, LME zinc opened at the intraday high of $3,400/mt. At the start of the session, bears increased open interest to push LME zinc sharply lower, hitting a low of $3,352.5/mt during European trading hours before oscillating around the daily moving average. An attempt to break above failed during the session, and the center dipped slightly toward the close, ultimately settling down at $3,359.5/mt, falling $35.5/mt or 1.05%. Trading volume increased to 13,292 lots, and open interest increased by 2,950 lots to 234,000 lots. Overnight, LME zinc posted a shaven-head bearish candlestick, with the daily candlestick center shifting lower and the 5-day moving average forming resistance above. Inflation concerns triggered by increased uncertainty over the US-Iran conflict strengthened the US dollar, keeping non-ferrous metals in the doldrums overall. Bears increased open interest to push the LME zinc center lower as well, but low TCs and low LME zinc inventory limited the decline.

Overnight, the most-traded SHFE zinc 2606 contract opened at 23,865 yuan/mt. At the start of the session, SHFE zinc quickly dropped to a low of 23,765 yuan/mt before the center shifted up to oscillate around the daily moving average, ultimately settling down at 23,850 yuan/mt, falling 95 yuan/mt or 0.4%. Trading volume decreased to 40,084 lots, and open interest decreased by 1,873 lots to 106,000 lots. Overnight, SHFE zinc posted a small bearish candlestick, with the KDJ indicator diverging downward. Increased macro instability and continued social inventory accumulation amid weak consumption on the fundamentals side weighed on zinc prices. However, improved downstream purchase sentiment following yesterday's decline, coupled with low TCs, suggested limited room for further downside in zinc prices.

Data source disclaimer: Data other than publicly available information was derived by SMM through processing based on public information, market communication, and SMM's internal database models. It is for reference only and does not constitute decision-making advice.