Social Inventory Increases, SHFE Zinc Maintains Fluctuating Trend [SMM Zinc Morning Comment]

Published: Jan 24, 2025 08:41 (GMT+8)
[SMM Zinc Morning Comment] Overnight, US President Trump stated that he would ask the US Fed to immediately cut interest rates and urged Saudi Arabia and OPEC to lower oil prices. Trump signed an executive order to release classified documents related to the Kennedy assassination, evaluate the creation of a national digital asset reserve, and ban central bank digital currencies. The Kremlin responded to Trump's sanction threats, stating that it did not see any particularly new factors. Argentine President Milei is considering withdrawing from the Paris Climate Agreement. President Xi Jinping conducted a field trip and survey in Shenyang, Liaoning Province. The Ministry of Finance stated that China’s large state-owned commercial insurance companies still have some room to increase their investment in the capital market and are currently studying a long-term assessment system for the National Social Security Fund.

Overnight, US President Donald Trump stated that he would request the US Fed to immediately cut interest rates and urged Saudi Arabia and OPEC to lower oil prices. Trump signed an executive order to release classified files related to the Kennedy assassination, evaluate the establishment of a national digital asset reserve, and prohibit central bank digital currencies. The Kremlin responded to Trump's sanction threats, stating that no particularly new factors were observed. Argentine President Javier Milei is considering withdrawing from the Paris Climate Agreement. Chinese President Jinping Xi conducted a field trip in Shenyang, Liaoning Province. The Ministry of Finance noted that there is still room for China's large state-owned commercial insurance companies to increase their investments in the capital market and is studying a long-term assessment system for the National Social Security Fund. The China Securities Regulatory Commission (CSRC) announced that over the next three years, the market value of A-shares held by public funds will increase by at least 10% annually, and the scale of the second batch of long-term stock investment pilot projects by insurance funds this year will not be less than 100 billion yuan. The National Financial Regulatory Administration encouraged insurance funds to steadily increase their proportion of stock market investments. The People's Bank of China (PBOC) stated that it would enhance the convenience of using policy tools and appropriately expand and increase the scale of these tools.

Overnight, LME zinc opened at $2,892.5/mt and quickly reached a session high of $2,894.5/mt. It then plunged to $2,860/mt, fluctuating rangebound. During the European trading session, longs reduced positions, causing LME zinc to decline further to a low of $2,839/mt. Subsequently, it attempted to rebound but faced resistance and pulled back, ultimately closing down at $2,844.5/mt, a decrease of $48.5/mt or 1.68%. Trading volume increased to 77,725 lots, while open interest decreased by 2,540 lots to 217,000 lots. Overnight, LME zinc recorded a third consecutive bearish candlestick, with the middle Bollinger Band providing resistance above and the lower Bollinger Band offering support below. On January 23, LME zinc inventory decreased by 1,825 mt to 191,125 mt, a drop of 0.95%. US President Donald Trump reiterated his intention to request the US Fed to immediately cut interest rates but did not make any clear statements regarding tariff issues. LME zinc fluctuated downward, with attention focused on further macro front developments.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,730 yuan/mt, starting at a low level. At the beginning of the session, longs increased positions, driving SHFE zinc to quickly rise and reach a high of 23,860 yuan/mt. Subsequently, SHFE zinc fluctuated along the daily moving average, and near the session's end, longs reduced positions, causing SHFE zinc to slightly decline. It ultimately closed up at 23,760 yuan/mt, an increase of 55 yuan/mt or 0.23%. Trading volume decreased to 44,411 lots, while open interest increased by 110 lots to 101,000 lots. Overnight, SHFE zinc recorded a bullish candlestick with no lower shadow, facing resistance from various moving averages above. As the festive atmosphere in China intensifies, downstream enterprises are gradually entering holiday mode, leading to increased social inventory and inventory buildup. Zinc prices are expected to fluctuate downward in a consolidative manner.

 

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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