SHFE Zinc Records a Bearish Candle, Short-Term Trend Expected to Be Mainly Volatile [SMM Zinc Morning Comment]

Overnight, Trump confirmed that tariffs on Mexico and Canada would take effect on March 4; US Fed's Harker stated that the policy does not appear to be significantly restrictive and may require interest rates to remain unchanged for a considerable period, while current stock market valuations are relatively high; Trump also mentioned efforts to help Ukraine reclaim as much territory as possible; Putin stated that Russia and the US are ready to re-establish cooperative relations; sources indicated that OPEC+ is hesitant about increasing production in April; the National Energy Administration noted that the cut-throat competition in the PV manufacturing industry has not been fundamentally resolved.

Overnight, LME zinc opened at $2,808/mt, fluctuating around the daily moving average in early trading, dipping to a low of $2,801/mt. During European trading hours, shorts reduced positions, driving LME zinc up to a high of $2,846/mt. Entering the night session, LME zinc gradually pulled back below the daily moving average, with the center fluctuating around $2,810/mt by the session's end. It closed higher at $2,809.5/mt, up $1.5/mt or 0.05%. Trading volume increased to 108,000 lots, while open interest decreased by 3,271 lots to 230,000 lots. Overnight, LME zinc recorded a long upper shadow bullish candlestick, with support provided by the lower Bollinger Band. On February 27, LME zinc inventory decreased by 425 mt to 164,950 mt, a decline of 0.26%. The reduction in overseas inventories provided some support for zinc prices. Trump confirmed that tariffs on Mexico and Canada would take effect on March 4, while a US Fed official indicated that interest rates may need to remain unchanged for a considerable period. LME zinc is expected to maintain a fluctuating trend in the short term.

Overnight, the most-traded SHFE zinc 2504 contract opened higher with a gap at 23,655 yuan/mt. In early trading, SHFE zinc fluctuated around the daily moving average, reaching a high of 23,670 yuan/mt. Subsequently, longs reduced positions, causing SHFE zinc to fluctuate downward below the daily moving average. During this period, SHFE zinc attempted to break above the daily moving average but faced resistance and pulled back, closing higher at 23,580 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 51,970 lots, while open interest fell by 763 lots to 91,061 lots. Overnight, SHFE zinc recorded a bearish candlestick, with resistance from the 10-day and 60-day moving averages above and support from the lower Bollinger Band below. Fundamentally, there is some expectation of increased supply, while downstream consumption is still recovering. Zinc prices are expected to maintain a fluctuating trend in the short term.