China mines resume production; SHFE zinc continues to consolidate at lows [SMM zinc morning comment]

SMM, September 17:

Overnight, LME zinc opened at $3,827/mt and drifted higher throughout the session, touching an intraday high of $3,866.5/mt before pulling back from highs. Near the end of trading, LME zinc dipped to a low of $3,801.5/mt, ultimately closing down at $3,810.5/mt, a decline of $21/mt or 0.55%. Trading volume decreased to 13,776 lots, and open interest fell by 27 lots to 267,000 lots. Overnight, LME zinc formed a bearish candlestick, with the 20-day moving average above acting as resistance. LME zinc inventory has continued to accumulate recently, and the LME zinc 0-3 backwardation structure pulled back to $88.37/mt, easing structural risks somewhat. Additionally, ahead of the US Fed meeting, market wait-and-see sentiment was strong, and LME zinc overall maintained a fluctuating trend.

Overnight, the most-traded SHFE zinc 2611 contract opened at 26,155 yuan/mt. In early trading, SHFE zinc dipped to a low of 26,100 yuan/mt, then slowly drifted higher, touching an intraday high of 26,225 yuan/mt before stabilizing at highs and consolidating. It ultimately closed down at 26,085 yuan/mt, a decline of 115 yuan/mt or 0.44%. Trading volume decreased to 36,431 lots, while open interest increased by 92 lots to 126,000 lots. Overnight, SHFE zinc formed a bullish candlestick, with the 60-day moving average above acting as resistance. LME zinc price trends continued to weigh on SHFE, and on the fundamentals side, production resumptions at Zhongjin Lingnan mines added to supply growth, while downstream consumption overall showed no clear improvement. Zinc prices are expected to continue consolidating at lows in the short term.

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