Fed interest rate cut expectations cooled, zinc prices may fall from highs [SMM zinc morning comment]

Overnight, the Vice Chairman of the Federal Reserve said: It is appropriate to maintain the policy interest rate in a tight range; the New York Fed survey in April: 1-year inflation expectations rose to 3.26%; the fighting in Kharkiv became tense, and the Ukrainian army replaced the commander of the tactical brigade; the Russian Deputy Prime Minister said: After the formation of the new government, the gasoline export ban will be considered to be lifted; Keith Gill, the leader of the "Retail Investors vs. Wall Street" movement, returned to the social platform after three years; Premier Li Qiang said: Do a good job in supporting the "double" construction with high quality, and provide strong support for promoting Chinese-style modernization; the Ministry of Finance said: It will issue ultra-long-term special government bonds separately, and the first 40 billion yuan of 30-year special government bonds are scheduled to be tendered on Friday; the central bank said: It will launch an interest rate swap contract with the international money market settlement date as the payment cycle; rumors of electricity price increases on June 1 caused multiple power stocks to hit the daily limit? State Grid refuted the rumor.

LME zinc opened at $2930/mt last evening, and hit a high of $2960/mt, and closed at $2997.5/mt, up $52.5/mt or 1.78%. Trading volume grew to 11614 lots, and open interest increased by 175 lots to 240,000 lots. LME zinc inventory fell by 550 tons to 251,400 tons, a decrease of 0.2%. LME inventory continued to decline, pushing up LME zinc prices. However, the Federal Reserve's one-year inflation expectations hit a new high, hitting expectations of a rate cut. Be careful of a fall in zinc prices in the near term.

The most active SHFE 2407 zinc contract rose 385 yuan/mt or 1.63% to settle at 23990 yuan/mt in overnight trading. Trading volumes decreased to 77926 lots and open interest grew 4461 lots to 105,000 lots. According to SMM research, as of Monday (May 13), the total zinc ingot inventory of SMM seven markets in China was 214,600 tons, and domestic inventory increased. Be alert to the risk of subsequent price declines.