Expectations for US Fed Interest Rate Cut Rise in December, LME Zinc Bottom Support Strengthens [SMM Zinc Morning Comment]

Last Friday, the LME zinc contract opened at $3,025/mt. During the session, bears reduced positions and exited the market, causing LME zinc to fluctuate upward. Although it briefly dipped during European trading hours, the upward trend remained intact. By the end of the session, the price center had shifted to around $3,050/mt, where it consolidated, eventually closing up at $3,051/mt, a gain of $29/mt, or 0.96%. Trading volume increased to 9,061 lots, while open interest decreased by 2,655 lots to 220,000 lots. Last Friday, LME zinc formed a bullish candlestick, with support from the 5-day and 40-day daily average moving averages, and the KDJ indicator's gap widened upward. The US dollar index remained in the doldrums, coupled with increased market expectations for a US Fed interest rate cut in December, supporting LME zinc to fluctuate at highs.

Last Friday, the most-traded SHFE zinc 2601 contract opened at 22,450 yuan/mt. After briefly testing a low of 22,380 yuan/mt early in the session, it traded above the daily average moving average and eventually closed up at 22,470 yuan/mt, a gain of 115 yuan/mt, or 0.51%. Trading volume decreased to 43,107 lots, while open interest increased by 798 lots to 102,000 lots. Last Friday, SHFE zinc formed a bullish candlestick with a long lower shadow, encountering resistance from the 20-day daily average moving average above and finding support from the 5-day and 10-day daily average moving averages below. According to SMM, refined zinc production in November fell more than expected by 22,000 mt MoM, and the decline continued in December, with overall production decreasing significantly. Supply-side support for zinc prices strengthened, and social inventory continued to draw down, supporting zinc prices to hold up well.

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