LME Warehouses Receive 7,000 mt, Dampening Bullish Sentiment in Zinc [SMM Zinc Morning Comment Oct 25]

Overnight, the number of initial jobless claims in the US last week hit a new low since the week of September 28; the US Fed's overnight reverse repo operations volume nearly fell below $200 billion; parties in the Gaza ceasefire negotiations reconvened in Doha, Qatar, with Hamas representatives heading to Cairo to hear the agreement; ECB Governing Council member Wunsch stated that at this stage, there is no need to discuss a 50 basis point interest rate cut; UK Chancellor Reeves confirmed adjustments to the UK's fiscal rules; the National Development and Reform Commission announced further opening of major national scientific research infrastructure to private enterprises; Shenzhen Municipal Financial Office aims to form a trillion-yuan government investment fund group; multiple banks in Guangzhou received instructions that mortgage loan rates should not be lower than the provident fund loan rates.

Overnight, LME zinc opened at $3,147/mt. At the beginning of the session, longs increased their positions, causing LME zinc to fluctuate upward, reaching a high of $3,284/mt during European trading hours. Subsequently, bullish sentiment waned, and LME zinc fluctuated downward, with its focus shifting to around $3,200/mt. Entering the night session, LME zinc accelerated its decline, with its focus further shifting to around $3,170/mt, and finally closed up at $3,174/mt, an increase of $28/mt or 0.89%. Trading volume increased to 21,139 lots, and open interest increased by 1,092 lots to 257,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, with various moving averages below providing support. Overnight, LME inventory increased by 7,000 mt to 239,150 mt, an increase of 3.02%, recording an increase in LME inventory. The concentration of funds in LME zinc significantly increased, with LME zinc breaking through previous highs. However, LME warehouses received 7,000 mt, dampening bullish sentiment, causing LME zinc to fall back from highs. Attention should be paid to the pace of fund withdrawal and inventory changes.

Overnight, the most-traded SHFE zinc 2412 contract opened at 25,610 yuan/mt. At the beginning of the session, there was a tug-of-war between longs and shorts, with SHFE zinc fluctuating around the daily moving average, reaching a high of 25,695 yuan/mt during the period. Subsequently, longs took profits and exited, causing SHFE zinc to fluctuate downward, hitting a low of 25,070 yuan/mt by the end of the session, and finally closed down at 25,180 yuan/mt, a decrease of 125 yuan/mt or 0.49%. Trading volume decreased to 155,000 lots, and open interest decreased by 6,955 lots to 123,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the KDJ indicator narrowing. Overnight, bullish sentiment waned, and SHFE zinc followed the downward trend. Meanwhile, the downstream consumption peak season is expected to end soon, and the environmental protection season in the north is starting again, hindering the upward momentum of zinc prices.