SHANGHAI, Jul 25 (SMM) – The SHFE zinc September contract is likely to manage to stand firmly above the 20-day moving average this week as it continues its technical upward correction after earlier tumbles, SMM believes.
The contract's technical indicators signalled it will sustain its upward momentum, with significant resistance at 21,800 yuan/mt or at the middle Bollinger band.
Maintenance across smelters continued to weigh on supplies. There were also no large inflows of imported materials this week while downstream consumption fell to the lowest level in a seasonal lull. Market participants should monitor developments of the negotiation between smelters and miners on treatment charges (TCs).
Separately, brisk trades following the rebound in zinc prices eased after the Shanghai Futures Exchange raised transaction fees for closing out positions opened on the same day, for the zinc September contract. Fees grew from 3 yuan/lot to 15 yuan/lot, effective from the night trading session of July 23.
Trading volumes of the SHFE zinc September contract soared to 1.44 million lots on July 22. Volumes fell to some 457,000 lots on July 24, the first day after higher transaction fees kicked in.