Low LME Inventory Provides Support, Limiting the Decline in Zinc Prices [SMM Morning Comment]

Overnight, the LME zinc contract opened at $2,868.5/mt. At the beginning of the session, LME zinc followed the daily moving average downward, probing a low of $2,828.5/mt near the night session before a slight upward correction at the close. It finally settled at $2,838/mt, down $31.5/mt or 1.1%, with trading volume decreasing to 12,511 lots and open interest increasing by 1,955 lots to 198,000. Overnight, LME zinc recorded a long lower shadow bearish candlestick, suppressed by the upper Bollinger Band. The strengthening US dollar overnight pressured nonferrous metals, while the US ADP employment data fell short of expectations and initial jobless claims exceeded forecasts. Today, market focus will be on the non-farm payrolls data performance.

Overnight, the most-traded SHFE zinc 2510 contract opened at 22,035 yuan/mt. Initially, SHFE zinc followed the daily moving average upward to touch a high of 22,135 yuan/mt before bulls took profits and exited, pulling prices back above the daily moving average. It finally settled at 22,070 yuan/mt, down 65 yuan/mt or 0.29%, with trading volume decreasing to 10,465 lots and open interest dropping by 1,412 lots to 117,000. Overnight, SHFE zinc recorded a small bullish candlestick, supported by the lower Bollinger Band. Profit-taking by bulls overnight lowered the price center, but the persistent backwardation structure overseas limited the downside room to some extent.

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