Driven by Overseas Market Trends, SHFE Zinc Focus Shifts Upward [SMM Morning Comment]

SMM, Aug 22:

Macro: US Fed Meeting Minutes: The vast majority of officials believe a rate cut in September is appropriate; US employment figures for the past year through March were revised down by 818,000; US EIA crude oil inventories decreased by 4.649 million barrels last week; China's real estate "white list" projects received financing approval of nearly 1.4 trillion yuan; Two government departments in China: Large-scale equipment upgrades will be implemented in key energy sectors; Eight cities in China are launching special actions to boost IPv6 traffic.

Overnight, LME zinc opened at $2,796.5/mt, and after the opening, it climbed all the way, initially dipping to $2,787/mt, peaking at $2,863/mt during the night session, and then retracing to fluctuate near the daily average line, finally closing up at $2,856/mt, an increase of $61.5/mt or 2.2%. Trading volume increased to 11,199 lots, and open interest decreased by 4,761 lots to 210,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Band forming resistance. LME inventory decreased by 1,175 mt to 257,625 mt, a drop of 0.45%. The significant downward revision of US employment growth data raised concerns about the labour market, with market expectations of a rate cut in September, providing macro support for LME zinc's upward movement.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,650 yuan/mt, initially peaking at 23,680 yuan/mt, briefly fluctuating downward to a low of 23,495 yuan/mt after the opening, then briefly rebounding to near the daily average line, and subsequently narrowly fluctuating along the daily average line, finally closing up at 23,580 yuan/mt, an increase of 40 yuan/mt or 0.17%. Trading volume decreased to 74,729 lots, and open interest increased by 2,831 lots to 105,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average providing support below. With continued macro optimism, driven by overseas markets and supported by tight supply at the mine end, SHFE zinc's focus shifted upward again. However, domestic demand remained weak, potentially limiting the upward space for SHFE zinc in the future.