Driven by Strong LME Performance, SHFE Zinc Continues to Trade at High Levels [SMM Zinc Morning Comment]

Overnight, the LME zinc contract opened at $3,336/mt. At the beginning of the session, it briefly dipped to $3,299.5/mt, then its center shifted to consolidate near the daily average line. Subsequently, bulls increased their positions, pushing the center of LME zinc slowly higher. It finally closed at the day's high of $3,358.5/mt, up $7.5/mt, a gain of 0.22%. Trading volume decreased to 11,350 lots, while open interest increased by 3,054 lots to 234,000 lots. Overnight, LME zinc formed a bullish candlestick with no upper shadow, and the MACD bullish candlestick expanded. As the US dollar fell to a nearly four-year low and geopolitical instability provided support at the bottom for zinc, coupled with continuous declines in LME zinc inventory, zinc prices showed relatively strong momentum.

Overnight, the most-traded SHFE zinc 2603 contract opened at 24,920 yuan/mt. At the start of the session, SHFE zinc briefly rallied but lacked momentum, causing its center to quickly pull back. After touching a low of 24,820 yuan/mt, bears took profits and exited the market, leading SHFE zinc to rise again and touch a high of 25,175 yuan/mt. It finally closed up at 25,025 yuan/mt, gaining 25 yuan/mt, an increase of 0.1%. Trading volume decreased to 123,000 lots, while open interest decreased by 1,180 lots to 118,000 lots. Overnight, SHFE zinc formed a bullish candlestick, supported by various moving averages below, and the KDJ gap expanded upward. Driven by the external market, zinc prices continued to fluctuate at highs. Combined with TCs remaining low and social inventory undergoing destocking, zinc prices have strong support at the bottom. It is expected that they will continue to fluctuate at high levels in the short term.

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