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

SMM May 22 Report:

Overnight, LME zinc opened at $2,724/mt. Early in the session, LME zinc edged lower, but recovered losses and climbed to a high of $2,737/mt near the European trading hours. However, as bulls reduced their positions, LME zinc plunged below the daily moving average to a low of $2,680/mt, eventually closing at $2,684.5/mt, down $40/mt or 1.47%. Trading volume decreased to 80,411 lots, while open interest fell by 4,611 lots to 213,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 60-day moving average acting as resistance above and the 20-day moving average providing support below. Weak demand at the 20-year US Treasury bond auction led to a relatively dismal outcome, heightening market concerns about the economy. Meanwhile, overseas inventories increased, causing LME zinc's center to decline amid the resonance of macro and fundamental factors.

Overnight, the most-traded SHFE zinc 2506 contract opened at 22,515 yuan/mt. Early in the session, SHFE zinc briefly climbed to 22,520 yuan/mt, but then edged lower below the daily moving average as bulls reduced their positions. Subsequently, a tug-of-war between bulls and bears ensued, with SHFE zinc's center fluctuating around 22,410 yuan/mt. It eventually closed lower at 22,415 yuan/mt, down 165 yuan/mt or 0.73%. Trading volume decreased to 38,011 lots, while open interest fell by 2,641 lots to 64,534 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 40/60-day moving averages acting as resistance above and the lower Bollinger Band providing support below. Recently, export orders in some downstream sectors have shown signs of improvement, driving a slight recovery in consumption. Meanwhile, amid expectations of easing supply, SHFE zinc is expected to maintain a fluctuating trend.