Low overseas inventory still supports zinc prices, with SHFE zinc expected to remain range-bound in the short term [SMM Zinc Morning Comment]

SMM August 25 News:

On Friday, LME zinc opened at $2,774.5/mt. At the beginning of the session, LME zinc fluctuated rangebound along the daily average line, hitting a low of $2,763.5/mt. During the European trading hours, with increased long positions, LME zinc briefly rose but then pulled back below the daily average line. In the night session, LME zinc reached a high of $2,821.5/mt and slightly declined towards the end, closing at $2,805.5/mt, up by $38.5/mt or 1.39%. Trading volume decreased to 62,909 lots, while open interest increased by 1,465 lots to 193,000 lots. On Friday, LME zinc inventory fell by 1,300 mt to 68,075 mt, a drop of 1.87%. On Friday, LME zinc recorded a large bullish candlestick, with the upper Bollinger Band providing resistance and the 60-day moving average offering support. The US dollar index plunged following Powell's speech at the Jackson Hole meeting, which boosted market expectations for an interest rate cut in September. Meanwhile, overseas inventories continued to decline, supporting LME zinc's upward trend.

On Friday, the most-traded SHFE zinc 2510 contract opened at 22,220 yuan/mt. At the start of the session, SHFE zinc hit a low of 22,200 yuan/mt. It attempted to rise, but an increase in short positions caused it to drop back slightly. As shorts reduced their positions, SHFE zinc quickly rose, reaching a high of 22,465 yuan/mt. Towards the end of the session, with longs reducing their positions, SHFE zinc pulled back slightly, closing at 22,400 yuan/mt, up by 125 yuan/mt or 0.56%. Trading volume decreased to 75,325 lots, while open interest fell by 2,847 lots to 105,000 lots. On Friday, SHFE zinc also recorded a large bullish candlestick, with the middle Bollinger Band providing resistance and the 60-day moving average offering support. Currently, spot zinc supply is relatively abundant in various domestic markets, but overall end-use consumption remains weak, putting some pressure on zinc prices. However, with overseas inventories falling below 70,000 mt, SHFE zinc has received some support. Zinc prices are expected to continue to fluctuate in the short term.