Funds traded cautiously, zinc prices showed a weak rebound [Institutional Commentary]

On Wednesday, the most-traded SHFE zinc ZN2506 contract opened higher, fluctuated and pulled back during the day, and opened higher and fluctuated at night, while LME zinc rose first and then fell. Spot market: The mainstream transaction prices of Shanghai 0# zinc were concentrated at 22,815-23,040 yuan/mt, with a premium of 220-230 yuan/mt against the 2505 contract. At the end of the long-term contract, the market volume was limited, traders continued to stand firm on quotes, the premium continued to rise, futures prices moved higher, downstream purchase willingness was weak, and transactions were moderate. The US April Markit composite PMI unexpectedly fell to a 16-month low, the Eurozone April composite PMI was almost flat, and both Germany and France fell into contraction. Overall, the April PMI data in Europe and the US were poor, the impact of tariffs gradually emerged, and the US Fed's Beige Book showed concerns about the deteriorating economic outlook in many regions. However, Trump and Bessent recently released optimistic signals on trade negotiations, and market sentiment improved. Currently, zinc ore supply is relatively ample, and the safety accident at the Antamina mine has limited short-term impact. If the shutdown period is long, it will affect the recovery pace of overseas zinc mines. Domestic smelters increased maintenance in May, supply pressure marginally eased, and demand is still in the peak season, supporting supply and demand improvement. However, macro uncertainties remain, and funds maintained cautious trading. The weighted open interest of SHFE zinc fluctuated around 235,000 lots, with no significant changes. The view of a weak rebound in zinc prices with limited upside in the short term is maintained, and inventory data will be watched today.