Domestic Inventory Continues to Increase, SHFE Zinc Records Three Consecutive Declines [SMM Zinc Morning Comment]

SMM October 14 news:

       Overnight, LME zinc opened at $3,002.5/mt. At the beginning of the session, the center rose to a high of $3,040/mt, then fluctuated downward to a low of $2,987/mt. It gradually recovered losses and rose, but pulled back at the end of the session, finally closing up at $3,012/mt, an increase of $27.5/mt, or 0.92%. Trading volume increased to 141,000 lots, and open interest rose by 621 lots to 221,000 lots. On October 10, LME zinc inventory decreased by 475 mt to 37,475 mt, down 1.25%. Overnight, LME zinc recorded a bullish candlestick, supported by the 20-day and 60-day daily averages. Current international trade tensions remain uncertain, and the market maintains some risk-off sentiment. Expectations for a US Fed interest rate cut continued to build, coupled with recent continued declines in overseas zinc inventory and the backwardation structure widening to over 100, providing strong support for LME zinc.

       Overnight, the most-traded SHFE zinc 2511 contract opened at 22,330 yuan/mt, reaching a high at the opening. It then fell rapidly to a low of 22,235 yuan/mt as bulls reduced positions, before recovering losses and rising. Towards the end of the session, a tug-of-war between longs and shorts kept the center fluctuating around 22,290 yuan/mt. It finally closed up at 22,285 yuan/mt, an increase of 30 yuan/mt, or 0.13%. Trading volume decreased to 54,960 lots, and open interest fell by 2,031 lots to 99,668 lots. According to SMM communication, as of this Monday (October 13), the total zinc ingot inventory across seven SMM-tracked locations was 163,100 mt, up 21,700 mt from September 29 and 12,900 mt from October 9, indicating an increase in domestic inventory. Overnight, SHFE zinc recorded three consecutive bearish candlesticks, supported by the 5-day and 40-day daily averages. According to SMM statistics, as of yesterday, domestic social inventory had increased to over 160,000 mt. Spot cargo performance in the market was loose, with inventory gradually building up, exerting some pressure on zinc price rises. Market participants are watching subsequent domestic market consumption data and destocking performance.