Tight Ore, Loose Ingot Pattern Unlikely to Change, SHFE Zinc Edges Down [SMM Morning Comment]

Overnight, LME zinc opened at $3,535/mt, briefly dipped to a low of $3,520.5/mt in early trading, then climbed all the way to hit a high of $3,600/mt during the night session before profit-taking caused the center to decline. It eventually closed up at $3,546/mt, up $11.5/mt or 0.33%. Trading volume increased to 15,243 lots, while open interest decreased by 562 lots to 234,000 lots. Overnight, LME zinc recorded a small bullish candlestick. Heightened expectations for a Fed rate hike this year and the US strike on Iran put funds in a stalemate at high levels, leaving LME zinc to predominantly fluctuate with its center edging slightly higher.

Overnight, the most-traded SHFE zinc 2607 contract opened higher with a gap at 24,885 yuan/mt, briefly rose to touch a high of 24,945 yuan/mt, then saw bulls reduce positions and fluctuated downward, dipping to a low of 24,670 yuan/mt near the end of the session. It eventually closed down at 24,730 yuan/mt, down 30 yuan/mt or 0.12%. Trading volume decreased to 66,029 lots, and open interest decreased by 463 lots to 89,434 lots. Overnight, SHFE zinc recorded a large bearish candlestick. Geopolitical turmoil resurfaced. Amid a tight ore supply and loose metal supply environment, SHFE zinc continued to fluctuate. A turning point for destocking in social inventory has not yet been observed. SHFE zinc closed slightly lower, and it is expected to fluctuate today.

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