Ore Supply Tightness Intensified, SHFE Zinc Rose [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,482/mt. Early in the session, LME zinc briefly dipped to a low of $3,457/mt before bulls increased their positions, driving LME zinc to fluctuate upward throughout the session, reaching a high of $3,542.5/mt near the close. It ultimately closed up at $3,532.5/mt, gaining $50.5/mt or 1.45%. Trading volume increased to 15,265 lots, and open interest rose by 727 lots to 242,000 lots. Overnight, LME zinc posted a large bullish candlestick. Although expectations for US Fed interest rate hikes within the year heated up, market concerns over supply intensified as Kazakhstan's Zazzinc reduced operating loads at its lead-zinc mine following an accident. LME zinc rallied, and is expected to hold up well today.

Overnight, the most-traded SHFE zinc 2606 contract opened higher with a gap at 24,620 yuan/mt. Early in the session, bulls increased their positions, and SHFE zinc quickly rose to a high of 24,820 yuan/mt before losing upward momentum, with the center shifting lower into range-bound trading. It ultimately closed up at 24,640 yuan/mt, gaining 260 yuan/mt or 1.07%. Trading volume decreased to 78,623 lots, and open interest increased by 2,742 lots to 90,915 lots. Overnight, SHFE zinc posted a large bullish candlestick. Disruptions to ore outside China increased, market tight supply sentiment intensified, and against the backdrop of rising energy and sulphuric acid costs, zinc concentrate TCs remained at low levels. SHFE zinc rallied, and is expected to hold up well today.

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