With loose supply and weakening demand, SHFE zinc is expected to remain in the doldrums in the short term [SMM Zinc Morning Comment]

SMM, June 16:

On Friday, LME zinc opened at $2,642.5/mt. In the early session, LME zinc fluctuated along the daily average line, reaching a high of $2,649.5/mt. During the European trading hours, LME zinc declined to a low of $25,882/mt. In the night session, LME zinc continued to rise above the daily average line, with the price center fluctuating rangebound around $2,625/mt near the close. It eventually closed down at $2,626.5/mt, down $17.5/mt or 0.66%. Trading volume increased to 144,000 lots, while open interest decreased by 236 lots to 206,000 lots. On Friday, LME zinc recorded a long lower shadow bearish candlestick, with the 10/60-day moving averages above exerting pressure. Affected by the escalation of geopolitical tensions in the Middle East due to Israel's attack on Iran, market risk aversion sentiment intensified, and LME zinc recorded a "V"-shaped reversal.

On Friday, the most-traded SHFE zinc 2507 contract opened at 21,745 yuan/mt. In the early session, bears increased their positions, pushing SHFE zinc below the daily average line to a low of 21,660 yuan/mt. Subsequently, as bears reduced their positions and exited the market, SHFE zinc fluctuated upward above the daily average line, reaching a high of 21,895 yuan/mt near the close. It eventually closed up at 21,895 yuan/mt, up 80 yuan/mt or 0.87%. Trading volume decreased to 78,378 lots, while open interest decreased by 2,631 lots to 121,000 lots. On Friday, SHFE zinc recorded a bald bullish candlestick, with various moving averages above exerting pressure. From a fundamental perspective, with the recent arrival of imported zinc ingots, there is still an expectation of loose supply in the domestic market in the future. However, downstream consumption demand is gradually weakening. Under this influence, SHFE zinc is expected to remain in the doldrums in the short term.