Improved Macro Sentiment Lifts SHFE Zinc Center [SMM Zinc Morning Comment]

SMM October 21:

   Overnight, the LME zinc contract opened at $2,938/mt. At the beginning of the session, LME zinc briefly dipped lower as bears reduced positions, then rose. During European trading hours, it touched a low of $2,935/mt, after which bears further reduced positions, causing LME zinc to fluctuate upward and trade considerably around the daily average line. In the night session, bears continued to reduce positions, pushing LME zinc higher to touch a high of $2,982.5/mt. It finally closed up at $2,976/mt, up $33.5/mt, a gain of 1.14%. Trading volume increased to 8,609 lots, while open interest fell by 13,012 lots to 211,000 lots. Overnight, LME zinc formed a large bullish candlestick. LME zinc inventory continued destocking, and risks remain. However, domestically released economic data exceeded market expectations, boosting market confidence. With fundamentals and macro factors aligning, the price center of LME zinc rose. LME zinc is expected to fluctuate today.

   Overnight, the most-traded SHFE zinc 2512 contract opened at 21,915 yuan/mt. At the beginning of the session, it briefly dipped to a low of 21,815 yuan/mt, then bulls increased positions, quickly driving SHFE zinc higher to touch a high of 21,970 yuan/mt. It finally closed up at 21,960 yuan/mt, up 110 yuan/mt, a gain of 0.5%. Trading volume decreased to 44,466 lots, while open interest increased by 2,585 lots to 128,000 lots. Overnight, SHFE zinc formed a small bullish candlestick. Macro-wise, China's GDP grew 5.2% YoY in the first three quarters, and China's value-added industrial output above the designated size increased 6.5% YoY in September, improving macro sentiment. Exports still hold some expectations, and a certain volume of spot cargo has been exported. However, the domestic oversupply structure remains unchanged. SHFE zinc is expected to fluctuate mainly today.