SHFE Zinc Rose Driven by LME, Recording a Bullish Candlestick with No Lower Shadow Overnight [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,585/mt. Early in the session, LME zinc edged down to a low of $3,568/mt before rising steadily above the daily moving average and touching a high of $3,650/mt during the night session. Toward the end of the session, the rally paused and prices pulled back slightly but still hovered at highs, ultimately closing up at $3,631/mt, gaining $49/mt or 1.37%. Trading volume increased to 129,000 lots, while open interest decreased by 2,690 lots to 227,000 lots. Overnight, LME zinc posted a bullish candlestick, hitting a near four-year high, with the 5-day and 60-day moving averages providing support below. Disruptions from the Middle East situation lifted geopolitical risk-aversion sentiment in the market. Combined with news of Iran attacking a US military base, short-term safe-haven support continued. Additionally, uncertain tariff prospects supported gains in non-ferrous metals, and zinc prices are expected to stay high and fluctuate in the near term.

Overnight, the most-traded SHFE zinc 2607 contract opened at 25,065 yuan/mt. Early in the session, SHFE zinc edged down to a low of 25,060 yuan/mt. Bulls then increased positions, pushing SHFE zinc above the daily moving average to a high of 25,355 yuan/mt. Subsequently, amid a tug-of-war between longs and shorts, SHFE zinc moved sideways around 25,300 yuan/mt, ultimately closing up at 25,250 yuan/mt, gaining 265 yuan/mt or 1.06%. Trading volume decreased to 89,945 lots, while open interest increased by 7,039 lots to 114,000 lots. Overnight, SHFE zinc posted a bullish candlestick with no lower shadow, with all moving averages providing support. In China, low ore TC provided downside support for zinc prices, but the downstream sector entering the off-season, weak rigid demand, and elevated inventory levels capped upside room. In the near term, SHFE zinc is expected to hold up well following LME, but sustained one-sided rises will be difficult due to consumption constraints.

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