Bearish Macro Sentiment, SHFE Zinc Declined [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $3,594/mt. In early trading, bulls and bears were intertwined, and the center of LME zinc edged slightly lower, oscillating around $3,570/mt. The center subsequently rebounded, and during the night session, LME zinc surged to touch a high of $3,602/mt. Afterwards, bears heavily added positions, and LME zinc probed a low of $3,522.5/mt at the session end, finally closing down $54.5/mt, or 1.52%, at $3,540/mt. Trading volume increased to 11,703 lots, and open interest rose 3,251 lots to 234,000 lots. Last Friday, LME zinc formed a large bearish candlestick. The US non-farm payrolls data for May again recorded strong growth, which pushed up market expectations of a rate hike by the US Fed within the year. The US dollar strengthened sharply, putting nonferrous metals under pressure and driving them lower, and the center of LME zinc shifted lower.

Last Friday, the most-traded SHFE zinc 2607 contract opened at 24,815 yuan/mt. In early trading, SHFE zinc surged to a high of 24,870 yuan/mt before bulls took profits and exited, causing the price to pull back, and it probed a low of 24,640 yuan/mt at the session end, finally closing down 85 yuan/mt, or 0.34%, at 24,695 yuan/mt. Trading volume decreased to 59,844 lots, and open interest fell 748 lots to 96,892 lots. Last Friday, SHFE zinc formed a small bearish candlestick, with the 5- and 10-day moving averages above exerting resistance. On the macro front, significantly increased rate hike expectations put nonferrous metals under pressure, and the weakness outside China dragged down domestic prices. End-use consumption in China weakened, pushing SHFE zinc lower. However, domestic zinc concentrate TCs declined further, providing some support to SHFE zinc and limiting its losses. SHFE zinc is expected to fluctuate today.

Data source statement: Data other than publicly available information is derived from SMM’s internal database model, based on public information and market communication, and processed by SMM. It is for reference only and does not constitute any decision-making advice.