Weak real estate data hurts market confidence, SHFE zinc prices declined [SMM zinc morning comment]

LME zinc prices opened at $2548/mt last evening and closed down $86.5/mt or 3.39% at $2466.5/mt. Trading volume increased to 11397 lots, and open interest decreased by 1323 lots to 208,000 lots. LME zinc inventory dropped by 1600 mt or 0.77% to 205700 mt. U.S. retail sales data in December exceeded expectations by 0.6%. The swap contract showed that the probability of the Federal Reserve cutting interest rates in March dropped to about 50%, further weakening market expectations for the Federal Reserve's interest rate cut in March. Macroeconomic pressure was positive, and the U.S. dollar index gained momentum.

The most active SHFE 2403 zinc opened at 21045 yuan/mt and fell 330 yuan/mt or 1.56% to close at 20870 yuan/mt trading with the high-end of 21045 yuan/mt and the low-end of 20850 yuan/mt. Trading volumes decreased to 61348 lots and open interest grew 6165 lots to 89136 lots. China's real estate development investment fell by 9.6% year-on-year in 2023, and the sales area of commercial housing nationwide fell by 8.5%. The weak real estate data dampened market sentiment, coupled with the external bearish sentiment, and the demand in the off-season was relatively light.