Fundamentals Show Mixed Signals, SHFE Zinc Hovers at High Levels [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,598/mt. Early in the session, it quickly touched a high of $3,607.5/mt, then pulled back. At midday, LME zinc rose above the daily average line but fell again and dipped to $3,568/mt. After entering the European trading session, LME zinc fluctuated higher and recovered most of its losses, finally closing down at $3,595/mt, down $8.5/mt, a decline of 0.24%. Trading volume decreased to 85,820 lots, while open interest increased by 434 lots to 231,000 lots. On June 4, LME zinc inventory fell by 625 mt to 111,900 mt, a drop of 0.56%. Overnight, LME zinc posted a small bearish candlestick, with the 10/60-day moving averages below providing support. Market optimism over a ceasefire in Lebanon strengthened, while inventories outside China declined; however, macro fluctuations have been significant recently, and LME zinc stayed in wild swings.

Overnight, the most-traded SHFE zinc 2607 contract opened at 24,860 yuan/mt. Early in the session, SHFE zinc surged higher and touched a high of 24,995 yuan/mt, then pulled back as bulls took profits, dipping to 24,830 yuan/mt. During the session, as bears reduced positions, prices fluctuated higher. Near the close, it edged up and traded around the daily average line, finally closing up at 24,915 yuan/mt, up 115 yuan/mt, an increase of 0.46%. Trading volume fell to 50,122 lots, while open interest decreased by 273 lots to 101,000 lots. According to SMM communication, as of June 4, China inventory decreased by 5,000 mt to 264,100 mt. Overnight, SHFE zinc posted a small bullish candlestick, with the 20/60-day moving averages below providing support. China inventory edged down but remained high above 260,000 mt; off-season characteristics in end-use consumption became evident, and SHFE zinc’s upward move was capped. However, as ore TC continued to decline, prices still found support on the downside, staying high and hovering.

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