Led by LME, SHFE zinc center moved higher [SMM zinc morning comment]

Overnight, LME zinc opened at $3,709.5/mt. It drifted lower in early trading, hitting a low of $3,683.5/mt during the European session. Subsequently, bears exited the market, prompting a rapid rally, with LME zinc reaching a high of $3,762.0/mt in the night session. Prices pulled back slightly toward the end of the session, eventually closing at $3,748.0/mt, up $34.0/mt, or 0.92%. Trading volume was 14,237 lots, and open interest increased by 1,195 lots to 260,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the center of the daily candlestick shifting higher, supported by the 20-day moving average below. Overnight LME inventory continued to decline, and the LME Cash-3M backwardation structure widened to $132.37/mt. Fund concentration increased, coupled with the US bond repurchase ceiling potentially exceeding $4 billion, which lifted the center of LME zinc. Given the high concentration of funds outside China, zinc prices are expected to fluctuate at highs.

Overnight, the SHFE zinc 2610 contract opened at 25,480 yuan/mt, drifting lower in early trading to a low of 25,425 yuan/mt. Subsequently, bulls added positions, and SHFE zinc continued to rise, reaching a high of 25,620 yuan/mt. Prices pulled back slightly toward the end of the session, finally settling at 25,590 yuan/mt, up 200 yuan/mt, or 0.75%. Trading volume decreased to 82,302 lots, and open interest increased by 63 lots to 138,000 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with the center of the daily candlestick shifting higher, capped by resistance from the 5- and 10-day moving averages above, while supported by the 20-day moving average below. The external market lifted the center of SHFE zinc, but China's social inventory accumulated further to 270,400 mt, suppressing upside room.

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