Approaching Labour Day Holiday, Light Zinc Positions Recommended for the Holiday [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,362/mt. Early in the session, LME zinc consolidated along the daily moving average before fluctuating upward to touch a high of $3,381.5/mt. Subsequently, bulls took profits and exited, sending LME zinc downward throughout the session, reaching a low of $3,608.5/mt during the night session. A slight correction occurred near the close, ultimately settling down at $3,329/mt, falling $30.5/mt or 0.91%. Trading volume decreased to 11,621 lots, and open interest decreased by 1,730 lots to 232,000 lots. Overnight, LME zinc recorded three consecutive bearish candlesticks, with the daily candlestick center shifting lower, while the 40-day moving average provided support below. Overnight, the US Fed kept interest rates unchanged, the US dollar index strengthened, and market concerns over economic growth intensified. Base metals were in the doldrums. The LME zinc 0-3 shifted to a contango structure, inventory also increased, and zinc price center moved lower.

Overnight, the most-traded SHFE zinc 2606 contract opened at 23,750 yuan/mt. Early in the session, SHFE zinc declined throughout, with the center shifting below the daily moving average. Attempts to break above failed, ultimately settling down at 23,595 yuan/mt, falling 265 yuan/mt or 1.11%. Trading volume decreased to 50,162 lots, and open interest decreased by 1,143 lots to 98,857 lots. Overnight, SHFE zinc recorded a bearish candlestick, with various moving averages above forming resistance. Under weak macro sentiment, base metals were overall under pressure. The spot market also saw a notable decline in trading activity due to tax invoice issues. However, low TCs provided strong bottom support for zinc prices. Attention should be paid to changes in macro sentiment and actual smelter production in May.

Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.