Low inventory supports zinc prices, and SHFE zinc is expected to fluctuate at highs [SMM zinc morning comment]

SMM June 27 News:

Overnight, LME zinc opened at $2,710/mt. Early in the session, LME zinc briefly dipped to a low of $2,708.5/mt before bears reduced their positions, causing LME zinc to fluctuate upward, reaching a high of $2,775/mt at the close. It ultimately closed up at $2,770/mt, gaining $60/mt or 2.21%. Trading volume increased to 15,465 lots, while open interest fell by 1,261 lots to 211,000 lots. Overnight, LME zinc recorded a large bullish candlestick. With renewed expectations of a significant interest rate cut in the US, the US dollar index fell to a low, providing a bullish catalyst for LME zinc. On the fundamental side, the workers' union at Nexa's only zinc smelter in Peru, Cajamarquilla, with an annual capacity of 344,000 mt, announced a strike on June 25, with the resumption time unknown. Additionally, LME zinc ingot inventory remained at a low level, boosting LME zinc's upward momentum. It is expected that LME zinc will continue to fluctuate at highs today.

Overnight, the most-traded SHFE zinc 2508 contract opened at 22,345 yuan/mt. Early in the session, SHFE zinc briefly dipped to a low of 22,270 yuan/mt before bulls increased their positions, causing SHFE zinc to fluctuate upward, reaching a high of 22,475 yuan/mt at the close. It ultimately closed up at 22,450 yuan/mt, gaining 210 yuan/mt or 0.94%. Trading volume decreased to 96,319 lots, while open interest increased by 3,796 lots to 139,000 lots. Overnight, SHFE zinc recorded a small bullish candlestick. Boosted by overseas market sentiment and the news of the strike at the Peruvian smelter, SHFE zinc followed LME zinc upward. Despite repeated expectations of domestic inventory buildup, the relatively low social inventory of zinc ingots continued to provide support. It is expected that SHFE zinc will continue to fluctuate at highs today.