Driven by LME, zinc prices opened higher with a gap, and SHFE zinc recorded a bullish candlestick [SMM Zinc Morning Comment]

SMM July 18 Report:

Overnight, LME zinc opened at $2,704.5/mt. Subsequently, LME zinc fluctuated upward along the daily average line. During European trading hours, LME zinc dipped to $2,686.5/mt, then continuously rose above the daily average line, touching a high of $2,740.5/mt. It eventually closed up at $2,737.5/mt, gaining $38/mt or 1.14%. Trading volume decreased to 60,614 lots, while open interest increased by 103 lots to 187,000 lots. Overnight, LME zinc inventory increased by 125 mt to 121,475 mt, a 0.10% increase. Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Bands acting as resistance and the 60-day moving average providing support. Overnight, the EU proposed new tariffs on US services and export controls as retaliation after trade negotiations broke down. Meanwhile, US retail sales in June rose by 0.6%, surpassing the previous value and expectations, reaching a new high since March this year. Market sentiment recovered, overshadowing lobbying concerns. Trump once again called on the US Fed to cut interest rates, and the center of LME zinc prices moved upward.

Overnight, the most-traded SHFE zinc 2509 contract opened higher with a gap at 22,175 yuan/mt. After opening, SHFE zinc dipped to 22,130 yuan/mt. Subsequently, with bulls increasing their positions, SHFE zinc rose, touching a high of 22,370 yuan/mt. Then, amid a tug-of-war between longs and shorts, SHFE zinc fluctuated rangebound around 22,350 yuan/mt. It eventually closed up at 22,345 yuan/mt, gaining 225 yuan/mt or 1.02%. Trading volume decreased to 80,014 lots, while open interest increased by 4,323 lots to 109,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the upper Bollinger Bands acting as resistance and the 40/60-day moving averages providing support. Influenced by LME zinc, SHFE zinc opened higher with a gap. However, the domestic fundamental situation remained unchanged. The impact of the off-season and expectations of loose supply provided insufficient support for zinc prices to continue surging. Subsequent attention should still be paid to changes in macro sentiment. It is expected that SHFE zinc will continue to fluctuate in the short term.