Macro tailwinds coupled with sluggish spot market, SHFE zinc hovers at highs [SMM Zinc Morning Comment]

Overnight, the LME zinc contract opened at $3,332.5/mt. At the beginning of the session, it touched a high of $3,360/mt, then fluctuated considerably around the daily average. Entering the night session, LME zinc fluctuated downward, touching a low of $3,293/mt, before rebounding slightly at the tail end of the session. It finally closed down at $3,305.5/mt, down $17.5/mt, a decline of 0.53%. Trading volume decreased to 83,901 lots, while open interest increased by 471 lots to 233,000 lots. Overnight, LME zinc recorded a four-day losing streak, with support provided by the 20-day and 60-day daily averages. Although the US ADP employment data fell short of expectations, the postponement of the non-farm payrolls and CPI data to next week leaves uncertainty, coupled with ongoing tensions in some international regions, leading LME zinc to trade in a fluctuating trend.

Overnight, the most-traded SHFE zinc 2603 contract opened at 24,785 yuan/mt. At the beginning of the session, it surged to touch a high of 24,980 yuan/mt. Subsequently, bulls reduced their positions and exited the market, causing SHFE zinc to fluctuate downward, touching a low of 24,725 yuan/mt. It maintained a fluctuating trend at lows until the tail end of the session, finally closing down at 24,770 yuan/mt, down 115 yuan/mt, a decline of 0.46%. Trading volume decreased to 85,471 lots, while open interest decreased by 2,186 lots to 77,033 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with resistance from the 5-day and 10-day daily averages above and support from the 20-day and 60-day daily averages below. Affected by domestic end-user holidays, trading in various spot markets was sluggish, putting pressure on zinc prices. However, the central bank indicated efforts to support key areas such as domestic demand expansion, technological innovation, and small and medium-sized enterprises, providing some macro positive factors. SHFE zinc is expected to maintain a fluctuating trend at highs.

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