US dollar weakens, LME zinc rises rapidly [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $2,691.5/mt. In the early session, a tug-of-war between longs and shorts caused LME zinc to fluctuate around the daily average line. During European trading hours, the price center slightly dipped, reaching a low of $2,653/mt. As the night session began, longs increased their positions, causing LME zinc to rally sharply, with the price center moving up to around $2,720/mt. The price touched a high of $2,721/mt at the end of the session, closing up at $2,720.5/mt, a gain of $51.5/mt or 1.93%. Trading volume decreased to 9,595 lots, while open interest increased by 1,926 lots to 220,000 lots. Overnight, LME zinc recorded a long lower shadow bullish candlestick, with the 5-day moving average providing support below. As US CPI data came in lower than expected, the US dollar pulled back, allowing LME zinc to rise.

Overnight, the most-traded SHFE zinc 2506 contract opened at 22,265 yuan/mt. After fluctuating around the daily average line in the early session, longs increased their positions, pushing SHFE zinc to fluctuate upward. The price touched a high of 22,695 yuan/mt at the end of the session, closing up at 22,680 yuan/mt, a gain of 355 yuan/mt or 1.59%. Trading volume decreased to 128,000 lots, while open interest decreased by 1,608 lots to 110,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the MACD bullish candlestick expanding. Driven by the strength of the LME zinc market overnight, SHFE zinc rallied sharply. However, expectations of imported arrivals combined with lackluster downstream purchasing led to a rapid pullback in spot premiums, a narrowing of the price spread between near-month contracts, and an increased likelihood of inventory growth. The fundamental support weakened at the margin.