Weak Consumption Limited Zinc’s Upside Room; Focus on Inventory Performance [SMM Zinc Morning Comment]

Last Friday, LME zinc opened at $3,745/mt. In early trading, LME zinc consolidated and moved lower around the daily average line, hitting a low of $3,720/mt near the start of the European session. After the European session began, bulls entered on dips, and LME zinc gradually stabilized and rebounded. During the night session, bulls continued to push prices higher, with LME zinc drifting higher to a high of $3,784/mt. Near the close, capped by the upper Bollinger Band, LME zinc pulled back slightly and ultimately closed up at $3,762/mt, up $17/mt, a gain of 0.45%. Trading volume decreased to 9,829 lots, while open interest increased by 306 lots to 255,000 lots. Last Friday, LME zinc posted a small bullish candlestick, with support from various moving averages below and resistance from the upper Bollinger Band above. Driven by an unexpected negative US monthly retail sales rate, a weaker US dollar, and an expanded backwardation structure on the LME, LME zinc maintained a drift-higher pattern.

Last Friday, the SHFE zinc 2609 contract opened at 25,750 yuan/mt. In early trading, bulls added positions and pushed SHFE zinc quickly higher, reaching 25,925 yuan/mt. It then consolidated and pulled back, pressured by the upper Bollinger Band and as profit-taking emerged. Near the close, after dipping to 25,690 yuan/mt, it rebounded slightly and ultimately closed at 25,740 yuan/mt, up 85 yuan/mt, a gain of 0.33%. Trading volume decreased by 34,646 lots to 51,270 lots, while open interest fell by 1,626 lots to 97,541 lots. Last Friday, SHFE zinc posted a small bearish candlestick with a long upper shadow, but the center of the daily candlestick moved higher, with support from various moving averages below. Social inventory continued destocking, but weak consumption capped upside room. Zinc prices were mainly rangebound, with attention on inventory performance in China and overseas.

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