Supply Side Support Is Strong, SHFE Zinc Holds Up Well [SMM Zinc Morning Comment]

Overnight, the LME zinc contract opened at $3,107.5/mt. After briefly touching a high of $3,112.5/mt at the beginning of the session, its center fluctuated around the daily average line. It later dipped to a low of $3,070/mt before finally closing down at $3,077.5/mt, a decrease of $30.5/mt, or 0.98%. Trading volume increased to 14,686 lots, and open interest rose by 3,686 lots to 227,000 lots. Overnight, LME zinc recorded a bearish candlestick, with support provided by the 5-day moving average. A stronger US dollar overnight put pressure on the upside for LME zinc, but the backwardation structure on the LME remained above $100/mt, leading zinc to mainly fluctuate at highs.

Overnight, the most-traded SHFE zinc 2512 contract opened at 22,605 yuan/mt. After quickly dipping to 22,590 yuan/mt early in the session, its center moved up and hovered around 22,660 yuan/mt, eventually closing down at 22,640 yuan/mt, a decline of 40 yuan/mt, or 0.2%. Trading volume decreased to 46,383 lots, while open interest fell by 2,214 lots to 115,000 lots. Overnight, SHFE zinc recorded a four-day winning streak, with resistance formed by the upper Bollinger Band. On the fundamentals side, expectations for smelter production cuts have increased as zinc TC falls rapidly, and export expectations remain, supporting SHFE zinc to fluctuate at highs.

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