Driven by LME, SHFE zinc opened higher with a gap [SMM Zinc Morning Comment]

SMM, June 20:

Overnight, LME zinc opened at $2,636/mt. Early in the session, LME zinc continued to decline below the daily moving average, hitting a low of $2,631/mt during European trading hours. Subsequently, as bears reduced their positions, LME zinc fluctuated upward to above the daily moving average, touching a high of $2,647.5/mt at the end of the session. It finally closed up at $2,646.5/mt, up $3/mt or 0.11%. Trading volume decreased to 59,743 lots, while open interest fell by 1,497 lots to 206,000 lots. Overnight, LME zinc recorded a bullish candlestick without an upper shadow, with the 10/60-day moving averages above acting as resistance. As the US Fed held off on interest rate cuts for the fourth consecutive time, Trump expressed dissatisfaction with Powell. Meanwhile, amid market concerns over the escalation of the Israel-Iran conflict, overall risk aversion sentiment was strong, leading to a "V"-shaped reversal in LME zinc.

Overnight, the most-traded SHFE zinc 2507 contract opened higher with a gap at 21,925 yuan/mt. Early in the session, SHFE zinc immediately touched a high of 21,985 yuan/mt. Subsequently, as bulls reduced their positions, SHFE zinc rapidly declined below the daily moving average, hitting a low of 21,865 yuan/mt. Then, the center of SHFE zinc moved slightly higher, finally closing at 21,890 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 41,820 lots, while open interest fell by 1,587 lots to 86,152 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 20/60-day moving averages above acting as resistance. Affected by tensions in the Middle East and driven by the LME market, SHFE zinc opened higher with a gap. However, due to insufficient support from domestic fundamentals for zinc prices, SHFE zinc fluctuated and pulled back. Zinc prices are expected to remain in the doldrums in the short term.