China Inventory Buildup, SHFE Zinc Still Faces Pressure Above [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,558.5/mt. Early in the session, LME zinc briefly dipped to a low of $3,542.5/mt. Bears then reduced their positions, and LME zinc rallied to a multi-year high of $3,633.5/mt. The center subsequently pulled back slightly, and LME zinc eventually closed up at $3,587/mt, gaining $35/mt or 0.99%. Trading volume fell to 14,070 lots, and open interest decreased by 139 lots to 242,000 lots. Overnight, LME zinc posted a small bullish candlestick with a long upper shadow. As surging inflation prompted the market to weigh the US Fed's interest rate path, the temporary closure of the Cajamarquilla zinc smelter in Peru due to a fire continued to fuel market sentiment around tight supply and rising costs. LME zinc continued to rise, touching a multi-year high, and is expected to hold up well today.

Overnight, the most-traded SHFE zinc 2606 contract opened at 25,000 yuan/mt. Early in the session, bulls increased their positions, and SHFE zinc briefly rose to a high of 25,075 yuan/mt before losing upward momentum. The center shifted lower to a low of 24,855 yuan/mt, and SHFE zinc eventually closed up at 24,915 yuan/mt, gaining 35 yuan/mt or 0.14%. Trading volume fell to 55,810 lots, and open interest increased by 47 lots to 89,049 lots. Overnight, SHFE zinc posted a small bearish candlestick. Market concerns over supply intensified, and driven by LME, SHFE zinc continued to rise. However, consumption remained relatively weak, and China saw continued inventory buildup, keeping pressure on SHFE zinc from above. SHFE zinc is expected to hold up well today.

Data source disclaimer: Data other than publicly available information is derived by SMM through processing based on public information, market communication, and SMM's internal database models. It is for reference only and does not constitute decision-making advice.