Domestic inventory continues to increase, SHFE zinc expected to maintain fluctuating trend [SMM Zinc Morning Comment]

SMM August 29 News:

Overnight, LME zinc opened at $2,764/mt. At the beginning of the session, LME zinc fluctuated along the daily average line. Subsequently, LME zinc surged above the daily average line but kept pulling back to a low of $2,754/mt under the influence of bulls reducing their positions. Entering the night session, LME zinc continued to rise and finally closed up at $2,787/mt, an increase of $23/mt or 0.83%. Trading volume increased to 93,320 lots, while open interest decreased by 372 lots to 192,000 lots. On August 28, LME zinc inventory decreased by 2,025 mt to 58,000 mt, a decline of 3.37%. Overnight, LME zinc recorded a bullish candlestick, with the 10- and 20-day moving averages exerting pressure from above and the 60-day moving average providing support from below. Currently, the independence of the US Fed is somewhat threatened, leading to a strong wait-and-see sentiment in the market. Meanwhile, some US Fed governors reiterated support for a 25-basis-point interest rate cut in September. Coupled with the fluctuating downward trend of the US dollar index and the continuous reduction in overseas inventories, LME zinc recorded a bullish candlestick.

Overnight, SHFE zinc opened at 22,145 yuan/mt. After briefly reaching a high of 22,155 yuan/mt post-opening, SHFE zinc rapidly declined to a low of 22,030 yuan/mt due to increased short positions. Then, as shorts reduced their positions, SHFE zinc's center moved above the daily average line, closing down at 22,100 yuan/mt, a decrease of 70 yuan/mt or 0.32%. Trading volume increased to 63,098 lots, while open interest increased by 2,485 lots to 117,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with various moving averages exerting pressure from above. According to SMM data, as of August 28, domestic social inventory continued to increase to over 140,000 mt. However, recent slight improvements in consumption in some downstream sectors, combined with support from low overseas inventories, are expected to keep SHFE zinc in the doldrums.