Optimism about interest rate cuts drives SHFE zinc higher [SMM Morning Comment]

SMM, Sep 12: US August CPI year-on-year rate fell for the fifth consecutive month, and the core CPI year-on-year rate remained the same as the previous value. Interest rate futures showed that the probability of a 50-basis-point rate cut by the US Fed in September was only 17%. Hamas: Willing to immediately implement a ceasefire agreement based on the previously proposed truce plan by the US and reject any new conditions. Various factions in Libya agreed to resume talks on Thursday regarding the issue of the central bank governor. "Florence" upgraded to a Category 2 hurricane, and 39% of oil production activities in the US Gulf of Mexico have stopped. Taylor Swift publicly stated her support for Harris to become the US president. CSRC: China's capital market mergers and acquisitions are entering an "active phase." CATL responded to the rumors of the lithium mine shutdown in Jiangxi: Adjustments to production based on market conditions. It was reported that Hillhouse Investment and Singapore Government Investment Company were considering subscribing to Midea's IPO stock in Hong Kong.
Overnight, LME zinc opened at $2,706/mt. During the early trading hours, LME zinc briefly fluctuated around the daily average, dipping to $2,692/mt. During the midday, LME zinc trended upwards, retreated to near the daily average during the night session, and surged again at the close to a high of $2,800/mt, ending up $90/mt at $2,797/mt, an increase of 3.32%. Trading volume increased to 13,494 lots, and open interest rose by 1,100 lots to 236,000 lots. Overnight, LME zinc recorded a bullish candlestick, with support from the lower Bollinger Band. LME zinc inventory decreased by 1,725 mt to 232,725 mt, a decrease of 0.74%. The US August non-seasonally adjusted year-on-year CPI was recorded at 2.5%, lower than market expectations, marking the fifth consecutive monthly decline and the lowest level since February 2021. Investors' expectations for a rate cut by the US Fed next week continued, bolstering the rise of LME zinc.
Overnight, the most-traded SHFE zinc 2410 contract opened at 23,025 yuan/mt. After the opening, SHFE zinc slowly trended downwards to a low of 22,820 yuan/mt, then fluctuated upwards to a high of 23,095 yuan/mt, finally closing up 140 yuan/mt at 23,085 yuan/mt, an increase of 0.61%. Trading volume decreased to 91,897 lots, and open interest decreased by 2,455 lots to 84,017 lots. Overnight, SHFE zinc recorded a bullish candlestick, with support from the 10-day moving average below. Both domestic and imported ore TC remained low. The weak supply fundamentals continued, coupled with market optimism about US Fed interest rate cuts, driving SHFE zinc higher as well.