Weak Supply and Demand, No Improvement for SHFE Zinc [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $2,701/mt. After the opening, LME zinc fluctuated rangebound around the daily moving average, rising to a high of $2,756/mt during midday, then falling below the daily moving average to a low of $2,690/mt. By the end of the session, LME zinc rebounded, moving back above the daily moving average, and finally closed at $2,731.5/mt, up $26.5/mt, or 0.98%. Trading volume decreased to 11,730 lots, while open interest increased by 2,323 lots to 232,000 lots. LME zinc recorded a bullish candlestick overnight, with the 5-day moving average forming resistance above. LME zinc stocks decreased by 1,825 mt to 236,550 mt, down 0.77%. The market awaited further disclosure of U.S. inflation data this week, and the previously bearish macro sentiment continued, keeping LME zinc fluctuating at low levels.

Overnight, the most-traded SHFE zinc 2410 contract opened at 22,940 yuan/mt. At the beginning of the session, it peaked at 22,940 yuan/mt before declining to a low of 22,690 yuan/mt, then rebounding to move above the daily moving average. It finally closed at 22,825 yuan/mt, down 20 yuan/mt or 0.09%. Trading volume decreased to 69,114 lots, and open interest decreased by 833 lots to 92,078 lots. Overnight, the most-traded SHFE zinc 2410 contract recorded a bearish candlestick, with the lower Bollinger Bands providing support. The tight supply of mines continued to support SHFE zinc. Although SMM reported that social inventory declined again on Monday, this was mostly due to output cuts at smelters. Ferrous metals prices continued to drag down galvanizing consumption, resulting in low-level fluctuations for SHFE zinc with no significant improvement.