Supply-side pressure persists, with SHFE zinc in the doldrums [SMM Zinc Morning Comment]

SMM, June 6:

Overnight, LME zinc opened at $2,701/mt. After opening, LME zinc rose to a high of $2,710.5/mt, then fluctuated downward. It approached the low of $2,680/mt during the night session, before rising again. After failing to break through the high, it fluctuated considerably around the daily average line, eventually closing down at $2,688/mt, down $16/mt or 0.59%. Trading volume increased to 11,407 lots, while open interest rose by 5,246 lots to 218,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the middle Bollinger Band providing support. The market continued to monitor the progress of trade negotiations, with tariff uncertainties persisting. LME zinc maintained in the doldrums, with its center slightly declining again.

Overnight, the most-traded SHFE zinc 2507 contract opened at 22,290 yuan/mt. In the early session, SHFE zinc dipped to a low of 22,230 yuan/mt, then rebounded from the low before declining again. It subsequently rose to a high of 22,355 yuan/mt, before fluctuating rangebound around the daily average line. It eventually closed down at 22,285 yuan/mt, down 55 yuan/mt or 0.25%. Trading volume increased to 86,501 lots, while open interest decreased by 2,248 lots to 122,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average acting as resistance. Recently, imported zinc ingots have continued to flow into the domestic market. Coupled with the expected significant increase in zinc ingot production in June, supply pressure persists. Additionally, downstream demand has entered the off-season, and SHFE zinc continued to be in the doldrums during the night session.