Expectations of loose supply still persist, and it is expected that SHFE zinc will remain volatile in the short term [SMM Zinc Morning Comment]

SMM, May 26:

Last Friday, LME zinc opened at $2,705.5/mt. In the early session, LME zinc fluctuated upward along the daily moving average, reaching a high of $2,721.5/mt during European trading hours. Subsequently, as bulls reduced their positions, LME zinc fluctuated downward, dipping to a low of $2,670.5/mt during the night session, before stabilizing and rebounding. LME zinc consolidated near the daily moving average, eventually closing up at $2,712.5/mt, up $8/mt or 0.3%. Trading volume increased to 8,815 lots, while open interest remained flat at 212,000 lots. Last Friday, LME zinc recorded a long lower shadow small bullish candlestick, retracing to the 5/10-day moving averages. Trump once again threatened to escalate the trade war, proposing to impose a 50% tariff on the EU starting from June 1. The US dollar index declined, and non-ferrous metals generally rose. Meanwhile, LME inventory continued to decrease, and LME zinc fluctuated upward.

Last Friday, the most-traded SHFE zinc 2507 contract opened at 22,155 yuan/mt. In the early session, SHFE zinc briefly dipped to a low of 22,085 yuan/mt. Subsequently, as bears reduced their positions, SHFE zinc fluctuated upward, reaching a high of 22,300 yuan/mt during the session, before fluctuating sideways. It eventually closed up at 22,280 yuan/mt, up 65 yuan/mt or 0.29%. Trading volume decreased to 67,614 lots, while open interest fell by 1,346 lots to 113,000 lots. Last Friday, SHFE zinc recorded a bullish candlestick, with the 10-day moving average acting as resistance. Trump once again escalated the trade war, and the US dollar index weakened, with non-ferrous metals generally rising. From a fundamental perspective, the expectation of a zinc ingot supply surplus still exists, but consumption remains resilient. SHFE zinc is expected to continue fluctuating.