Limited fundamental support, SHFE zinc in the doldrums [[SMM Zinc Morning Comment]]

SMM, May 7:

Overnight, LME zinc opened at $2,626/mt. After a slight decline in the early session, LME zinc rebounded from the lows and climbed to a high of $2,664.5/mt. Subsequently, SHFE zinc fluctuated upward above the daily average line. Then, LME zinc declined again during the night session, reaching a low of $2,621/mt. Near the end of the session, LME zinc rebounded from the lows to near the daily average line, eventually closing up at $2,626.5/mt, up $11.5/mt or 0.44%. Trading volume increased to 11,213 lots, while open interest decreased by 64 lots to 209,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 5-day moving average providing support below. The weakening US dollar index supported zinc prices to rise. However, persistent concerns about the demand outlook in the market and macroeconomic pressures weighed on zinc prices, limiting the gains of LME zinc during the night session.

Overnight, the most-traded SHFE zinc 2506 contract opened at 22,300 yuan/mt. In the early session, SHFE zinc reached a low of 22,300 yuan/mt, then continuously rose from the lows. After hitting a high of 22,470 yuan/mt, SHFE zinc fell again below the daily average line and began to fluctuate. It eventually closed up at 22,360 yuan/mt, up 5 yuan/mt or 0.02%. Trading volume decreased to 553.44 million lots, while open interest increased by 1,970 lots to 114,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the upper band of the Bollinger Bands forming resistance. The domestic zinc ingot supply level in May remained strong on a MoM basis, while market expectations for May consumption were weak amid tariff disruptions. Insufficient fundamental support for zinc prices led SHFE zinc to maintain a fluctuating trend.