Capital Exits as Main Trend, SHFE Zinc Rises Above 22,000 yuan/mt [SMM Zinc Morning Comment]

Overnight, the LME zinc contract opened at $2,888.5/mt. After briefly consolidating around the daily average line at the beginning of the session, it fluctuated upward along the upper side of the daily average line. Toward the end of the session, the price center shifted upward to around $2,940/mt, reaching a high of $2,944.5/mt, and finally closed up at $2,937/mt, an increase of $50.5/mt, or 1.75%. Open interest remained flat at 219,000 lots, while trading volume increased by 1,997 lots to 10,160 lots. Overnight, LME zinc formed a large bullish candlestick, with the KDJ indicator expanding upward. Affected by the potential US government shutdown, the US dollar was in the doldrums overnight, leading to broad gains in nonferrous metals, with LME zinc rising accordingly.

Overnight, the most-traded SHFE zinc 2511 contract opened higher with a gap at 21,890 yuan/mt. During the session, bears mainly reduced their positions, and SHFE zinc overall traded above the daily average line, with the price center moving above 22,000 yuan/mt. It finally closed up at 22,020 yuan/mt, an increase of 265 yuan/mt, or 1.22%. Trading volume decreased to 90,562 lots, while open interest fell by 11,035 lots to 131,000 lots. Overnight, SHFE zinc formed a bullish candlestick, with the 20-day daily average line providing resistance above and the lower Bollinger Band offering support below. The strong performance in the LME, combined with continued destocking in domestic social inventory ahead of the holiday and funds exiting the market for risk aversion, boosted the zinc price center upward.

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