Fundamentals Show Increased Supply and Decreased Demand, SHFE Zinc Fluctuates Downward [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $2,900.5/mt. After the opening, LME zinc gradually moved downward along the daily moving average, surged to a high of $2,918/mt during the midday session, then slightly declined to a low of $2,868/mt during the night session. Subsequently, LME zinc rebounded to hover near the daily moving average and ultimately closed lower at $2,879/mt, down by $16/mt or 0.55%. Trading volume decreased to 11,693 lots, and open interest dropped by 1,800 lots to 218,000 lots. Overnight, LME zinc formed a bearish candlestick, with resistance from the 5-day moving average. LME zinc inventory decreased by 4,625 mt to 224,525 mt, a decline of 2.02%. US November JOLTs job openings data and December ISM non-manufacturing PMI both exceeded market expectations, leading to a rebound in the US dollar index, which continued to pressure zinc prices. The center of LME zinc prices continued to edge downward.

Overnight, the most-traded SHFE zinc 2502 contract opened at 24,340 yuan/mt. At the beginning of the session, SHFE zinc slightly rose to a high of 24,420 yuan/mt, then moved downward to fluctuate below the daily moving average, hitting a low of 24,285 yuan/mt during the session. Near the end of the session, SHFE zinc rebounded again to hover near the daily moving average and ultimately closed lower at 24,320 yuan/mt, down by 75 yuan/mt or 0.31%. Trading volume decreased to 59,408 lots, while open interest increased by 1,557 lots to 106,000 lots. Overnight, SHFE zinc formed a bearish candlestick, with support from the lower Bollinger Band. As the Chinese New Year holiday approaches, downstream demand is gradually weakening. Coupled with SMM's expectation of increased domestic refined zinc production in January, the imbalance of rising supply and weakening demand has led to insufficient fundamental support for zinc prices, causing SHFE zinc to continue to fluctuate downward.