Expectations of Further Interest Rate Hikes Increase, LME Zinc Is Slightly Under Pressure

The U.S. added 209,000 non-farm payrolls after seasonal adjustment in June, lower than the expected 225,000, the smallest increase since December 2020. The Fed swap slightly reduces the chances of the Fed raising interest rates for the second time this year (again); Chicago Fed President Goolsbee said that it can raise interest rates 1-2 times this year, and has not yet decided what rate the Fed should adopt in July Policy, still hope to see inflation data before making a decision; U.S. Treasury Secretary Yellen met with Chinese Premier, Chinese Vice Premier, Party Secretary of the People's Bank of China, State Administration of Foreign Exchange and Finance Minister and other Chinese officials during her visit to China from July 7 to 9.. Yellen reiterated that the United States does not seek to "decouple" from the Chinese economy.

Last Friday, LME Zinc opened at US$2369.5/ton, fluctuated and fell rapidly in the night session, hit as low as US$2,336/ton, and then recovered slightly. It finally closed at US$2,361/ton, decline by US$11.5/ Tons with 0.48% drops, the trading volume decreased to 5,146 lots, and the open position increased by 3,772 lots to 182,000 lots. LME Zinc recorded a long shadow column overnight, suppression on the 40-day average price line. LME inventories decreased by 800 tons to 73,935 tons, and LME inventories recorded a decrease. The small non-agricultural data brought market stronger expectations for further interest rate hikes, and LME Zinc was slightly under pressure.

Last Friday, SHFE Zinc main contract 2308 opened at a low price of 19,955 yuan / ton. After the opening, it fluctuated all the way up, and finally closed at 20,050 yuan / ton, down 110 yuan / ton,  with 0.55% drops, and the trading volume decreased to 64,140 lots. Holding positions increased by 2,995 lots to 108,000 lots. SHFE Zinc recorded a small positive column overnight, and the 40-day average price provided support. Last Friday night, the trend of the China internal and external market diverged slightly. The internal market rebounded to repair the price decline. The social inventory was slightly destocked to provide support for the zinc price back to 20,000 yuan/ton. The overall support is limited, and zinc prices still have downside risks.