US Manufacturing Data Decline Drags LME Zinc to Fluctuate Downward [SMM Zinc Morning Comment]

Overnight, US manufacturing contraction intensified, but the services sector continued to drive the economy; Israel stated that it is "closer than ever to reaching an agreement" on the Gaza hostage issue; 10 EU countries sought to expand sanctions on Russian metals; Trump announced plans to meet with Putin and Zelensky to negotiate a ceasefire agreement; the central bank emphasized implementing a moderately loose monetary policy with timely RRR cuts and interest rate cuts; the NBS stated that in the next phase, efforts should focus on stabilizing employment, boosting income, and enhancing residents' consumption capacity; the Ministry of Finance decided to carry out government bond market-making support operations in December.

Overnight, LME zinc opened at $3,086/mt. At the beginning of the session, LME zinc briefly touched a high of $3,100.5/mt before its center slightly dipped, fluctuating around the daily moving average. During the night session, longs reduced positions and exited, causing LME zinc to fluctuate downward, with its center shifting to around $3,050/mt. It hit a low of $3,044.5/mt during the session and eventually closed down at $3,046/mt, a decrease of $43.5/mt or 1.41%. Trading volume decreased to 7,332 lots, and open interest fell by 631 lots to 233,000 lots. Overnight, LME zinc recorded a bearish candlestick, with its daily candlestick center moving downward, while the 5-day moving average below provided support. Overnight, LME inventory decreased by 2,000 mt to 266,500 mt, a drop of 0.74%, marking a reduction in LME inventory. The preliminary December S&P Global Manufacturing PMI in the US recorded 48.3, lower-than-expected and hitting a three-month low, causing LME zinc to fluctuate downward.

Overnight, the most-traded SHFE zinc 2502 contract opened at 25,520 yuan/mt. At the beginning of the session, SHFE zinc fluctuated around the daily moving average before reaching a high of 25,580 yuan/mt. However, shorts launched high-level attacks, causing SHFE zinc to fluctuate downward, with its center shifting to 25,400 yuan/mt by the end of the session. It eventually closed at an intraday low of 25,380 yuan/mt, down 175 yuan/mt or 0.68%. Trading volume decreased to 32,633 lots, while open interest increased by 3,283 lots to 124,000 lots. Overnight, SHFE zinc recorded a bearish candlestick with no lower shadow, as the 5-day moving average above formed resistance, while the 20-day moving average below provided support. Dragged down by the overseas market, SHFE zinc's center shifted downward overnight. However, on the fundamentals side, SMM zinc inventory continued to decrease by 2,000 mt to 89,400 mt, with inventory reductions limiting the downside space for zinc prices.