LME drives SHFE to weaken, SHFE zinc center declines [SMM zinc morning comment]

SMM December 12:

Overnight, the LME zinc contract opened at $3,085/mt. It briefly rose to an intraday high of $3,098.5/mt in early trading, but then fluctuated downward as bulls reduced their positions, eventually hitting a low of $3,033/mt towards the session's close. It finally settled at $3,035/mt, down $60/mt or 1.94%. The trading volume increased to 20,961 lots, while open interest fell by 3,203 lots to 233,000 lots. Overnight, LME zinc formed a large bearish candlestick, pressured by the 5-day and 10-day daily average moving averages. Macro sentiment weakened. LME inventory increased by 31,075 mt. Furthermore, the LME is expected to implement position limits on key contracts starting July 2026, prompting funds to roll over to farther-term contracts. LME zinc declined. LME zinc is expected to be in the doldrums today.

Overnight, the most-traded SHFE zinc 2602 contract opened at 23,005 yuan/mt. It briefly rose to an intraday high of 23,025 yuan/mt in early trading, but then fluctuated downward as bulls reduced their positions, eventually hitting a low of 22,860 yuan/mt towards the session's close. It finally settled at 22,870 yuan/mt, down 175 yuan/mt or 0.76%. The trading volume decreased to 55,403 lots, while open interest fell by 1,425 lots to 81,731 lots. Overnight, SHFE zinc formed a small bearish candlestick. A large volume was shipped to overseas delivery warehouses, alleviating the tight sentiment caused by low inventory. Environmental protection alerts were issued in many parts of northern China, which dragged on consumption. However, the domestic zinc supply side still provided support. The decline in SHFE zinc was smaller than that in LME zinc. SHFE zinc is expected to be in the doldrums today.