Zinc Futures Prices May Fall Back As Bulls Reduce Positions

Overnight, LME zinc prices opened at $2381/mt and closed up $13/mt or 0.99% at $2386.5/mt. The trading volume was 8561 lots, and open interest decreased 697 lots to 202,000 lots. The U.S. labor market is tight and supports the resilience of the economy. The market’s expectations for the Fed’s interest rate hikes to be suspended or converted to rate cuts have weakened. The U.S. dollar index has strengthened, and the performance of long funds has weakened.

Last evening, the most active SHFE 2310 zinc contract prices opened at 20460 yuan/mt and closed at 20540 yuan/mt, up 130 yuan/mt or 0.64%. Trading volume stood at 62,000 lots, and open interest gained by 1975 lots to 102,000 lots. SHFE zinc outperformed LME zinc. With tight supply, the performance of long funds is strong. However, with the successive arrivals of domestic zinc and the influx of imports, the support from fundamentals to zinc prices will weaken.