Imports of zinc concentrates surged in April; SHFE zinc is expected to continue fluctuating considerably in the short term [SMM Zinc Morning Comment]

SMM News on May 21:

Overnight, LME zinc opened at $2,673/mt. Subsequently, LME zinc fluctuated rangebound along the daily average line, dipping to a low of $3,660.5/mt. During European trading hours, bears reduced their positions, pushing the center of LME zinc above the daily average line. The night session saw LME zinc touch a high of $2,727.5/mt before pulling back slightly at the end of the session. It finally closed up at $2,724.5/mt, up $52/mt or 1.95%. Trading volume decreased to 81,021 lots, while open interest fell by 6,088 lots to 218,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 60-day moving average acting as resistance above and the 20-day moving average providing support below. Recently, US Fed officials have made more cautious statements about the economy. Meanwhile, the market is focused on the upcoming talks between the US and Japan. The US dollar has weakened, while overseas inventories continue to decline, supporting the upward movement of the center of LME zinc.

Overnight, the most-traded SHFE zinc 2506 contract opened higher with a gap at 22,530 yuan/mt. In the early session, SHFE zinc consolidated along the daily average line, dipping to a low of 22,510 yuan/mt. Subsequently, bears reduced their positions, and SHFE zinc quickly rose to touch a high of 22,675 yuan/mt. Then, as bulls continuously reduced their positions and exited the market, the center of SHFE zinc pulled back to near the daily average line. It finally closed up at 22,590 yuan/mt, up 155 yuan/mt or 0.69%. Trading volume decreased to 50,594 lots, while open interest fell by 2,923 lots to 73,707 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 40/60-day moving averages acting as resistance above and the 5/20-day moving averages providing support below. Driven by the LME market, the center of SHFE zinc has moved upward. In April, China's zinc concentrate imports surged 72.07% YoY, and expectations of a loose supply side still persist. It is expected that zinc prices will remain volatile in the short term.