Driven by positive macro and funding conditions, the center of LME zinc prices moved up [SMM zinc morning comment]

On Friday last week, LME zinc opened at $2,737.5/mt. In the early session, LME zinc consolidated around the daily average line. During the European trading session, bulls increased their positions, causing LME zinc to fluctuate upward with its center running above the daily average line. Entering the night session, LME zinc accelerated its upward trend, with its center running near $2,820/mt by the end of the session, touching a high of $2,826.5/mt. It finally closed up at $2,824.5/mt, gaining $86.5/mt or 3.16%. Trading volume increased to 18,401 lots, while open interest decreased by 507 lots to 187,000 lots. On Friday last week, LME zinc recorded a large bullish candlestick, and the MACD turned bullish. On Friday last week, the US dollar index pulled back, and non-ferrous metals generally rose. The LME 0-3 zinc spread turned into a backwardation structure again, and LME zinc inventory decreased. Additionally, the "anti-rat race" competition sentiment in China resurfaced, leading to a concentrated increase in capital, and the center of LME zinc moved upward.

On Friday last week, the most-traded SHFE zinc 2509 contract opened higher with a gap at 22,420 yuan/mt. In the early session, bullish capital pushed SHFE zinc to rally rapidly, with its center moving upward to near 22,800 yuan/mt. By the end of the session, it touched a high of 22,890 yuan/mt. It finally closed up at 22,880 yuan/mt, gaining 580 yuan/mt or 2.6%. Trading volume increased to 152,000 lots, while open interest increased by 18,294 lots to 134,000 lots. On Friday last week, SHFE zinc recorded a large bullish candlestick, with various moving averages below providing support and the KDJ opening expanding upward. On Friday last week, zinc prices showed a strong trend, driven partly by an increase in the concentration of overseas capital and partly by the upcoming release of a steady growth work plan for ten key industries, including steel, non-ferrous metals, and petrochemicals, proposed by the Ministry of Industry and Information Technology (MIIT) in China. Additionally, the commencement of the hydropower project in the lower reaches of the Yarlung Zangbo River was beneficial for non-ferrous metals. Zinc prices led the gains. Considering the favorable macro and capital sentiment, zinc prices are expected to hold up well.

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