US Manufacturing Data Declines, Dragging LME Zinc to Fluctuate Downward [SMM Zinc Morning Comment Dec 17]  

Overnight, US manufacturing activity further declined, while the services sector continued to support the economy. Israel stated that an agreement on the hostage issue in Gaza has "never been closer"; ten 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 conduct government bond market-making support operations in December.

Overnight, LME zinc opened at $3,086/mt, briefly touched a high of $3,100.5/mt in early trading before its center slightly dipped and fluctuated 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. LME inventory decreased by 2,000 mt to 266,500 mt overnight, a drop of 0.74%, marking a reduction in LME inventory.

Overnight, the preliminary December S&P Global US Manufacturing PMI 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. In early trading, 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 decline throughout the session. By the end of trading, its center shifted downward to 25,400 yuan/mt, and it 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, facing resistance from the 5-day moving average above and support from the 20-day moving average below.

Overnight, dragged by the overseas market, SHFE zinc's center shifted downward. 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.