LME Inventory Surges, LME Zinc Weakens [SMM Zinc Morning Comment]

SHANGHAI, August 7 (SMM) –Overnight, the US Fed's "mouthpiece" stated that the threshold for an emergency rate cut is very high, and the Fed will debate whether to cut rates by 50 basis points in September. The White House said it does not believe that Iran or Hezbollah have begun responding to Israel's actions. Yahya Sinwar, considered the mastermind behind the "10.7 attack," has become the new political bureau leader of Hamas. The GDPNow model has raised its forecast for US Q3 GDP growth. Harris officially received the Democratic presidential nomination, with Minnesota Governor Tim Walz as her running mate. The US Department of Energy continues to replenish the strategic crude oil reserve. In China, three departments announced that they will focus on nine special actions to effectively promote the construction of a new power system. In Guangzhou's Huadu District, buying a new house may grant "quasi-household registration." The local housing and construction bureau confirmed the policy.

Overnight, LME zinc opened at $2,650.5/mt. During the initial long-short tussle, it reached a high of $2,662.5/mt. Subsequently, as bulls retreated from the high, LME zinc fluctuated downward. During European trading hours, the focus shifted to around $2,600/mt for consolidation. Attempts to break above failed, and it dipped to $2,575/mt. In the night session, LME zinc saw a slight pullback, fluctuating along the average daily line, and finally closed lower at $2,612/mt, down $30/mt, a decline of 1.14%. Trading volume decreased to 12,053 lots, and open interest increased by 2,388 lots to 223,000 lots. Overnight, LME zinc recorded four consecutive bearish candles, with various moving averages forming resistance above. Overnight, LME zinc inventory surged by 18,050 mt to 247,825 mt, an increase of 7.86%, shifting from a decline to an increase. Overnight, as funds entered the market at low levels, global stock markets rebounded, easing market sentiment. However, concerns about an economic recession persisted, and LME zinc continued to operate weakly.

Overnight, the most-traded SHFE zinc 2409 contract opened at an intraday low of 21,990 yuan/mt. SHFE zinc shorts mainly exited the market, with the focus slightly lifting and narrowly fluctuating around the average daily line. During this period, it reached a high of 22,210 yuan/mt and finally closed lower at 22,120 yuan/mt, down 20 yuan/mt, a decline of 0.09%. Trading volume decreased to 83,764 lots, and open interest decreased by 128 lots to 82,705 lots. Overnight, SHFE zinc recorded a bullish candle, with the lower Bollinger Bands providing support. Overnight, market sentiment eased somewhat, and other non-ferrous metals showed signs of stabilization. Meanwhile, support from the zinc supply side remained, suggesting limited further downside for zinc prices.