Fundamentals Support Zinc Prices to Maintain Strength [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,396/mt. At the beginning of the session, bulls increased their positions, pushing LME zinc to rise along the daily average line, reaching a high of $3,575.5/mt during the night session. Subsequently, bulls took profits and exited, causing LME zinc to decline rapidly, with its center shifting to around $3,430/mt. It finally closed up at $3,453/mt, an increase of $77.5/mt, or 2.3%. Trading volume rose to 28,316 lots, and open interest increased by 913 lots to 234,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, touching a new high since August 2022, with the MACD bullish candlestick expanding. Overnight, LME zinc showed strong momentum, but during the night session, due to the US Fed releasing hawkish signals and the US dollar rebounding, nonferrous and precious metals plummeted significantly. However, LME zinc inventory continued destocking, and disruptions in the ore side persisted, providing strong support at the bottom for zinc prices, with limited overall room for correction.

Overnight, the most-traded SHFE zinc 2603 contract opened at 26,200 yuan/mt. At the beginning of the session, SHFE zinc rose along the daily average line, reaching a high of 26,985 yuan/mt. Subsequently, nonferrous metals overall corrected, and SHFE zinc's center shifted down to 26,070 yuan/mt. It finally closed up at 25,995 yuan/mt, an increase of 325 yuan/mt, or 1.27%. Trading volume rose to 336,000 lots, and open interest decreased by 2,434 lots to 112,000 lots. Overnight, SHFE zinc recorded a long upper shadow bearish candlestick, with various moving averages below providing support. Overnight, the external market led SHFE zinc to lead the gains in nonferrous metals. On the fundamentals side, social inventory remained low, and zinc prices were generally undervalued, providing strong support. After a significant macro cooling, zinc prices showed relative resilience, and it is expected to mainly fluctuate with adjustments.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.