Driven by the LME surge, SHFE zinc center continued to rise [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,884/mt. In early trading, LME zinc consolidated sideways around the daily average line, hitting a low of $3,872/mt during the period. Entering the European session, bulls added positions, and LME zinc shot up to touch a high of $3,949.5/mt. During the night session, LME zinc retreated from its highs, giving back most of its gains, with the price pulling back near the daily average line. It finally closed up at $3,885.5/mt, an increase of $1/mt or 0.03%. Trading volume increased to 20,972 lots, and open interest rose by 1,640 lots to 265,000 lots. On August 26, LME zinc inventory increased by 2,275 mt to 93,300 mt, a rise of 2.39%. Overnight, LME zinc formed a bullish candlestick with a long upper shadow, with the moving averages below providing support. While LME inventories have increased recently, most inflows have gone to Hong Kong warehouses, and the overall inventory level remains below 100,000 mt. The low inventory level and regional supply mismatch of zinc ingot supported the zinc price rise, with bulls adding positions and pushing prices higher. However, last night, the US July PCE was slightly above expectations, and market expectations for a US Fed rate hike next month edged up slightly. LME zinc showed an inverted "V" reversal pattern. It is expected to continue consolidating on a strong note today.

Overnight, the most-traded SHFE zinc 2610 contract opened higher with a gap at 26,455 yuan/mt. After opening, SHFE zinc consolidated near the daily average line, touching a high of 26,560 yuan/mt during the period. In the session, bulls reduced positions and the price pulled back somewhat, dipping to a low of 26,415 yuan/mt. It finally closed up at 26,430 yuan/mt, an increase of 190 yuan/mt or 0.72%. Trading volume decreased to 103,000 lots, and open interest increased by 8,033 lots to 170,000 lots. Overnight, SHFE zinc formed a small bearish candlestick, with the moving averages below providing support. The rally in LME zinc drove the SHFE zinc price center higher. Although domestic consumption performance was mediocre, it is heavily influenced by changes in LME zinc currently. It is expected that SHFE zinc will continue to hold up well during the day.

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