SMM Zinc Market Morning Comment (May 8)

Overnight, LME zinc prices opened at $2,992/mt, and hit a high of $2,975/mt before falling back to $2,945/mt, and closed at $2,943/mt, up $35/mt or 1.2%. The trading volume rose to 12,134 lots, and open interest fell by 1,089 lots to 243,000 lots. LME zinc inventory decreased by 250 mt to 253,725 mt, a drop of 0.1%. With expectations of interest rate cuts by Federal Reserve and a decrease in LME inventories, the macro environment is bullish. However, the strengthening of the US dollar has suppressed the upward trend of LME zinc prices. Therefore, LME zinc prices are expected to fluctuate widely.

Overnight, the most-traded SHFE 2406 zinc contract fell to 23,340 yuan/mt after opening at 23,395 yuan/mt, but then rose to 23,585 yuan/mt before closing at 23,485 yuan/mt, up 210 yuan/mt or 0.9%. Trading volume dropped to 75,267 lots, and open interest decreased by 701 lots to 91,701 lots. The macro sentiment cooled down slightly. The short-term ore supply tightness and declining TC still provided support for zinc prices. However, as the downstream demand has not improved, it is expected that SHFE zinc prices will continue to fluctuate.