SHFE Zinc Opens Higher with a Gap, Fundamentals Continue to Drag [SMM Zinc Morning Comment]

SMM Oct. 30:

Overnight, LME zinc opened at $3,051/mt. At the beginning of the session, it moved briefly with fluctuations along the daily average line, touching a low of $3,050/mt, then rose all the way to a high of $3,094.5/mt, after which it fluctuated above the daily average. Toward the end of the session, LME zinc turned downward, finally closing up at $3,070/mt, up $13.5/mt or 0.44%. Trading volume decreased to 10,629 lots, and open interest fell by 1,275 lots to 221,000 lots. Overnight, LME zinc formed a bullish candlestick, supported by the 5-day moving average. Low LME zinc inventory continued to boost zinc prices, and LME zinc is expected to continue fluctuating upward. However, US Fed officials dampened expectations for a December interest rate cut, and the US dollar index rose. Continued attention to subsequent macro guidance is needed.

Overnight, the most-traded SHFE zinc 2512 contract opened at 22,490 yuan/mt. During the night session, SHFE zinc fluctuated around the daily average line, reaching a high of 22,530 yuan/mt early in the session and touching a low of 22,435 yuan/mt near the end, finally closing up at 22,455 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 47,030 lots, and open interest increased by 1,081 lots to 120,000 lots. Overnight, SHFE zinc formed a bearish candlestick, pressured by the upper Bollinger Band. Boosted by LME zinc's performance, SHFE zinc gapped up to a high in the night session, and the price center shifted upward. However, the fundamental picture of strong supply and weak demand remains unchanged, downstream consumption remains weak, and upward pressure on SHFE zinc persists.

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