Supply-side Tightness Supports Zinc Prices, SHFE Zinc Fluctuates at Highs [SMM Zinc Morning Comment Oct 28]

Over the weekend, Israel launched a military strike on Iran. Sources said Iran informed Israel through a third party that it would not respond. US media reported that Iran's Supreme Leader Khamenei is seriously ill. The head of Israel's Mossad led secret talks on a Gaza ceasefire, but Israeli media revealed that he has not yet been authorized. The final results of Japan's House of Representatives election showed that the ruling coalition did not win a majority of seats. Chinese President Xi Jinping emphasized strengthening inclusive, basic, and bottom-line social welfare. The Vice Minister of Finance stated that China is confident in achieving an annual economic growth target of around 5%. The State Council stressed the need to focus on achieving the annual economic and social development goals and to continue implementing a package of incremental policies. In Q3 this year, Central Huijin significantly increased its holdings of several broad-based ETFs.

Last Friday, LME zinc opened at $3,183/mt, reaching a high at the opening. Subsequently, LME zinc fluctuated downward below the daily moving average, hitting a low of $3,034/mt. Then, LME zinc's focus shifted upward above the daily moving average, and by the end of the session, it fluctuated rangebound around $3,100/mt, closing down at $3,099.5/mt, a decrease of $74.5/mt or 2.35%. Trading volume decreased to 103,000 lots, and open interest increased by 1,031 lots to 258,000 lots. Last Friday, LME zinc recorded a V-shaped reversal. The upper Bollinger Bands formed resistance, while the 40-day moving average provided support. LME inventory increased by 3,275 mt to 242,425 mt, an increase of 1.37%, and social inventory also increased. Currently, international regional tensions persist, and supply-side tightness continues, causing LME zinc to fluctuate.

Last Friday, the most-traded SHFE zinc 2412 contract opened at 24,915 yuan/mt. At the beginning of the session, shorts increased their positions, causing SHFE zinc to fluctuate around the daily moving average and hit a low of 24,865 yuan/mt. Subsequently, shorts reduced their positions, and SHFE zinc fluctuated upward above the daily moving average, reaching a high of 25,090 yuan/mt. By the end of the session, longs reduced their positions, causing SHFE zinc to slightly decline, closing down at 25,005 yuan/mt, a decrease of 25 yuan/mt or 0.10%. Trading volume decreased to 80,425 lots, and open interest decreased by 1,400 lots to 114,000 lots. Last Friday, SHFE zinc recorded a small bullish candlestick. The 5-day moving average formed resistance, while the middle Bollinger Bands provided support. Currently, supply-side tightness supports SHFE zinc fluctuating at highs, and more macro data needs to be monitored in the future.