Insufficient fundamental support, SHFE zinc in the doldrums [SMM zinc morning comment]

SMM, June 5:

Overnight, LME zinc opened at $2,706/mt. After opening, LME zinc rose steadily, hitting a high of $2,730/mt during the midday session, before pulling back from highs and declining all the way. It touched a low of $2,692/mt near the end of the session, eventually closing down at $2,704/mt, down $7.5/mt or 0.28%. Trading volume decreased to 9,128 lots, while open interest fell by 521 lots to 213,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average providing support below. Although the US ADP employment data fell short of expectations and the US dollar index declined, the market continued to focus on trade negotiations, with persistent concerns about tariffs. As a result, LME zinc maintained a fluctuating trend.

Overnight, the most-traded SHFE zinc 2507 contract opened at 22,380 yuan/mt. In the early session, SHFE zinc weakened slightly, touching a low of 22,285 yuan/mt, before slowly rising and oscillating above the daily average line. It hit a high of 22,385 yuan/mt near the end of the session, eventually closing down at 22,380 yuan/mt, down 40 yuan/mt or 0.18%. Trading volume decreased to 63,797 lots, while open interest fell by 3,425 lots to 121,000 lots. Overnight, SHFE zinc recorded a doji, with the 40-day moving average providing support below. Macro factors continued to weigh on zinc prices. Coupled with weak downstream consumption during the off-season, the fundamentals provided insufficient support for zinc prices, and SHFE zinc continued to be in the doldrums.