Insufficient Fundamental Support, SHFE Zinc Opens Lower with a Gap [SMM Zinc Morning Comment]

SMM January 19:

Last Friday, LME zinc opened at $3,307/mt, touched a high of $3,312/mt early in the session, then fluctuated downward throughout the day. Approaching the close, it hit a low of $3,195.5/mt and finally settled down at $3,209/mt, down $104.5/mt, a decline of 3.15%. Trading volume decreased to 14,896 lots, while open interest increased by 806 lots to 232,000 lots. Last Friday, LME zinc formed a bearish candlestick, finding support below the 10-day moving average. As macro sentiment gradually digested, funds reduced positions at high levels, and nonferrous metals generally declined. Considering insufficient fundamental support for zinc prices, LME zinc also fell significantly, and it is expected to fluctuate mainly in the short term.

Last Friday, the most-traded SHFE zinc 2603 contract opened at 24,560 yuan/mt. After opening, it fluctuated around the daily average line, touched a high of 24,585 yuan/mt early in the session, and hit a low of 24,335 yuan/mt near the close, finally settling down at 24,405 yuan/mt, down 345 yuan/mt, a decline of 1.39%. Trading volume decreased to 138,000 lots, while open interest decreased by 8,582 lots to 134,000 lots. Last Friday, SHFE zinc formed a bearish candlestick, finding support below the 20-day moving average. Domestic zinc concentrate TCs remained low, downstream zinc orders performed poorly during the off-season, and the fundamental supply-demand weakness persisted. Additionally, dragged down by a significant pullback in LME zinc prices, SHFE zinc subsequently corrected.

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