SHFE zinc recorded a bearish candlestick. Follow-up attention should be paid to downstream consumption [SMM Zinc Morning Comment]

SMM, May 20:

Overnight, LME zinc opened at $2,689.5/mt. After opening, LME zinc fluctuated considerably along the daily average line, reaching a high of $2,706.5/mt during the session. Entering the night session, the center of LME zinc moved downward, operating below the daily average line. It touched a low of $2,670.5/mt at the end of the session, closing down at $2,672.5/mt, a decline of $13.5/mt or 0.50%. Trading volume decreased to 84,672 lots, while open interest fell by 4,336 lots to 224,000 lots. LME zinc recorded three consecutive bearish candlesticks overnight, with the 40-day moving average acting as resistance above and the 20-day moving average providing support below. Atlanta Fed President Bostic reiterated his preference for only one interest rate cut this year, while Moody's downgraded the US credit rating, which had a certain impact on market sentiment, causing the center of LME zinc to pull back.

Overnight, the most-traded SHFE zinc 2506 contract opened at 22,415 yuan/mt. After opening, SHFE zinc briefly touched a high of 22,490 yuan/mt. Subsequently, as bulls reduced their positions, SHFE zinc plunged downward, operating below the daily average line and touching a low of 22,360 yuan/mt. Then, as bears reduced their positions, SHFE zinc rebounded, recovering most of the losses. However, at the end of the session, as bulls reduced their positions and exited the market, SHFE zinc moved downward again, operating below the daily average line. It closed down at 22,405 yuan/mt, a decline of 50 yuan/mt or 0.22%. Trading volume decreased to 44,280 lots, while open interest fell by 4,755 lots to 80,805 lots. SHFE zinc recorded a bearish candlestick overnight, with the 5-day moving average acting as resistance above and the lower Bollinger Band providing support below. Driven by the recent easing of trade tensions, consumption in some downstream sectors has shown a slight improvement. Meanwhile, expectations for an increase in supply still exist. Going forward, attention can be paid to end-user export orders. It is expected that zinc prices will maintain a fluctuating trend in the short term.