Social Inventory Continues Destocking, Supporting Zinc Prices [SMM Zinc Morning Comment Nov 22]

Overnight, US Fed's Goolsbee expressed openness to acting at a slower pace; Ukrainian Air Force reported that Russia used an intercontinental ballistic missile for the first time during the conflict; the Technology Department of the People's Bank of China is accelerating the issuance of compliance guidelines for cross-border data flows in the financial industry; the Ministry of Industry and Information Technology (MIIT) emphasized the need to continuously increase R&D investment, focusing on computing power, models, and data; the State-owned Assets Supervision and Administration Commission (SASAC) urged central state-owned enterprises to navigate through economic cycles; China's manned lunar mission has fully entered the prototype development stage.

Overnight, LME zinc opened at $2,982.5/mt. Initially, LME zinc fluctuated rangebound around the daily moving average. During European trading hours, LME zinc briefly dipped to a low of $2,963/mt before returning to the daily moving average. In the night session, increased long positions pushed LME zinc upward, reaching a high of $3,019/mt. The focus then shifted to around $3,000/mt, and it finally closed up at $3,003.5/mt, an increase of $27/mt or 0.91%. Trading volume decreased to 9,151 lots, while open interest increased by 1,966 lots to 243,000 lots. Overnight, LME zinc recorded five consecutive days of gains, with the daily K-line moving higher, supported by the 5-day and 10-day moving averages below. Overnight, LME inventory decreased by 3,700 mt to 264,625 mt, a drop of 1.38%, marking another reduction in LME inventory. The supply-side issues for zinc persist, and long funds remain highly favored, driving zinc prices further upward.

Overnight, the most-traded SHFE zinc 2412 contract opened at 25,255 yuan/mt. Initially, SHFE zinc followed the daily moving average upward, quickly reaching a high of 25,340 yuan/mt before the focus fell back to around the daily moving average. Towards the end of the session, reduced long positions led SHFE zinc to dip to a low of 25,165 yuan/mt, and it finally closed flat at 25,185 yuan/mt. Trading volume decreased to 56,418 lots, while open interest decreased by 1,375 lots to 95,789 lots. Overnight, SHFE zinc turned from gains to losses, but the daily K-line moved higher, supported by various moving averages below. Overnight, SMM social inventory decreased by 9,200 mt to 118,700 mt. Downstream consumption remained moderate, supporting zinc prices.