LME outperforms SHFE, SHFE zinc encounters resistance [SMM zinc morning comment]

Overnight, LME zinc opened at $2,795/mt. After a brief consolidation along the daily average line in the early session, LME zinc continued to rise above the daily average line, reaching a high of $2,825.5/mt during European trading hours. Subsequently, LME zinc fluctuated downward amid short selling and long liquidation, with its center moving below the daily average line. It recovered slightly towards the end of the session, closing up at $2,815.5/mt, up $20.5/mt or 0.73%. Trading volume increased to 10,672 lots, while open interest rose by 2,082 lots to 193,000 lots. Overnight, LME zinc recorded a four-day winning streak, with the MACD bearish candlestick narrowing and the daily candlestick center moving upward. Overnight, Trump's nomination of a new board member raised market expectations for an interest rate cut. Additionally, the meeting between Putin and Trump sparked market expectations for a ceasefire in the Russia-Ukraine conflict. Meanwhile, LME inventory fell again to below 85,000 mt, supporting LME zinc's hold up well.

Overnight, the most-traded SHFE zinc 2509 contract opened at 22,525 yuan/mt. After quickly touching a low of 22,435 yuan/mt in the early session, its center moved up near the daily average line and slightly lifted towards the end of the session, closing down at 22,510 yuan/mt, down 20 yuan/mt or 0.09%. Trading volume decreased to 39,622 lots, while open interest fell by 723 lots to 96,096 lots. Overnight, SHFE zinc stopped rising and started to fall, with various moving averages below providing support. Domestic supply growth is relatively certain, with social inventory increasing to 113,200 mt, putting pressure on zinc prices from above.

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