Insufficient Fundamental Support, Zinc Prices Retreat from Highs [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,464.5/mt. At the beginning of the session, LME zinc rose along the daily moving average to touch a high of $3,486/mt. During European trading hours, bulls took profits and exited, and LME zinc declined in a stepwise manner, probing a low of $3,389/mt near the end of the session, ultimately closing lower at $3,395/mt, down $67.5/mt, a decline of 1.95%. Trading volume increased to 11,170 lots, and open interest decreased by 1,217 lots to 231,000 lots. Overnight, LME zinc posted a bearish candlestick with a long upper shadow. The KDJ indicator diverged downward, with the 20-day moving average providing support below. US-Iran negotiations reached an impasse, escalating conflict expectations rose, base metals came under overall pressure, and bulls primarily reduced positions and exited, pushing the zinc price center lower.

Overnight, the most-traded SHFE zinc 2606 contract opened lower with a gap at 24,285 yuan/mt. SHFE zinc trended downward throughout the session, with the center running below the daily moving average. It probed a low of 23,920 yuan/mt near the end of the session, ultimately closing lower at 23,935 yuan/mt, down 495 yuan/mt, a decline of 2.03%. Trading volume decreased to 76,345 lots, and open interest decreased by 1,599 lots to 108,000 lots. Overnight, SHFE zinc posted a bearish candlestick, with the daily candlestick center shifting lower and the Bollinger Bands middle band providing support below. Overnight, non-ferrous metals declined broadly, with zinc prices falling significantly. The main reason was that on the fundamentals side, social inventory accumulated again to above 260,000 mt, and with the Labour Day holiday approaching, end-user demand was weak and more downstream enterprises were on holiday, resulting in insufficient fundamental support.

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