TCs continued to rise, and SHFE zinc recorded a negative bar [SMM Zinc Morning Comment]

Last Friday, both the annual and monthly rates of the US core PCE price index for February exceeded market expectations. US Fed's Daly stated that there is a reasonable expectation of two more interest rate cuts in 2025. Trump mentioned that starting a third presidential term is not a joke, and one method is to have Vance take office and then step aside. Foreign media reported that Trump will visit Saudi Arabia for the first time in May. A 7.9-magnitude earthquake occurred in Myanmar. The State Administration for Market Regulation announced that it will legally review the transaction of Changhe Port. The State-owned Assets Supervision and Administration Commission of the State Council stated that it will strategically restructure central state-owned enterprises in the automotive sector. Several banks have raised consumer loan interest rates, generally not lower than 3%.

Last Friday, LME zinc opened at $2,895.0/mt, initially fluctuating around the daily average line, reaching a high of $2,902/mt. Subsequently, longs reduced their positions, and LME zinc declined continuously, rebounding slightly during the night session before continuing to trend downward, closing at the day's low of $2,851.5/mt, down $46.5/mt, a decrease of 1.60%. Trading volume increased to 12,255 lots, while open interest decreased by 2,035 lots to 223,000. Overnight, LME zinc inventory decreased by 2,000 mt to 144,575 mt, a drop of 1.36%. Last Friday, LME zinc recorded a large bearish candle, with the 20-day moving average forming resistance. The US Fed maintained its expectation of two interest rate cuts within the year, but due to the impending implementation of reciprocal tariffs, market concerns about economic prospects led to a broad decline in non-ferrous metals, with LME zinc falling.

Last Friday, the most-traded SHFE zinc 2505 contract opened at 23,730 yuan/mt. Initially, shorts increased their positions, causing SHFE zinc to quickly drop below the daily average line, reaching a low of 23,610 yuan/mt. It then fluctuated around 23,630 yuan/mt, eventually closing at 23,620 yuan/mt, down 150 yuan/mt, a decrease of 0.63%. Trading volume decreased to 73,765 lots, while open interest increased by 4,314 lots to 116,000. Last Friday, SHFE zinc recorded a bearish candle, with the 40-day moving average forming resistance. Driven by the LME, SHFE zinc declined, while TC continued to rise, and domestic zinc ingot supply remained relatively loose. It is expected that SHFE zinc will continue to fluctuate in the short term.