Demand Weakens, SHFE Zinc Declines [SMM Zinc Morning Comment]

Overnight, US media reported that Biden might launch strikes before leaving office if Iran accelerates the development of nuclear facilities. An ECB Governing Council member predicted that interest rates would drop to 2% by this autumn. Elon Musk called for a re-election in the UK. South Korea's Corruption Investigation Office for High-ranking Officials issued an arrest warrant for Yoon Suk-yeol. Li Qiang emphasized the continued implementation of the trade-in policy for consumer goods. The Ministry of Commerce announced measures against 10 US companies under the unreliable entity list. Policies related to stock buybacks, increased holdings, and relending were adjusted and optimized.
Overnight, LME zinc opened at $2,992/mt. In early trading, it fluctuated near the daily moving average, briefly reaching a high of $3,020.5/mt. During European trading hours, longs exited the market, causing LME zinc to plunge downward, closing at the intraday low of $2,924/mt, down $65/mt or 2.17%. Trading volume increased to 15,006 lots, while open interest decreased by 3,247 lots to 221,000 lots. Overnight, LME zinc formed a large bearish candlestick with no lower shadow. LME zinc inventory decreased by 800 mt to 234,100 mt, a drop of 0.34%. The US dollar continued to rise, and concerns over increased tariffs dampened global demand. Additionally, global manufacturing data showed declines, weakening demand. LME zinc faced downward pressure and is expected to fluctuate downward today.
Overnight, the most-traded SHFE zinc 2502 contract opened at 24,920 yuan/mt. In early trading, SHFE zinc briefly rose to a high of 25,040 yuan/mt before longs reduced positions, causing SHFE zinc to fluctuate downward, hitting a low of 24,780 yuan/mt near the session's end. It ultimately closed at 24,800 yuan/mt, down 465 yuan or 1.84%. Trading volume decreased to 86,977 lots, while open interest fell by 6,940 lots to 124,000 lots. Overnight, SHFE zinc formed a small bearish candlestick. The middle Bollinger Band provided resistance, and the KDJ indicator showed a downward opening. Macro sentiment weakened as the US dollar continued to strengthen. Fundamentally, social inventory increased, easing the tight supply of zinc ingots. Consumption weakened as downstream enterprises gradually entered the holiday season. Dragged down by LME zinc, SHFE zinc declined and is expected to fluctuate downward today.