Domestic Consumption Weakens, SHFE Zinc Fluctuates [SMM Zinc Morning Comment]

Last Friday, Trump stated it is "very likely" to grant TikTok a 90-day grace period on his first day in office; incoming officials revealed that immigration issues are a key focus in the details of the executive orders Trump plans to issue; the Gaza ceasefire agreement is set to take effect at 5:15 PM Beijing time on the 19th; Israel's National Security Minister resigned; Japanese media reported that the vast majority of Bank of Japan committee members are expected to support a rate hike this week; U.S. Treasury Secretary Yellen announced the initiation of extraordinary measures to avoid a debt default; Chinese President Xi Jinping held a phone call with U.S. President-elect Trump; the People's Bank of China and the China Securities Regulatory Commission jointly held a symposium on stock repurchase and refinancing to further leverage policy tools to stabilize the capital market; various regions in China will begin implementing subsidies for the purchase of mobile phones and other digital products starting January 20; is Xiaomi acquiring NIO? NIO's Ma Lin responded to "brokerage speculation" as "pure fabrication."

Last Friday, LME zinc opened at $2,879.5/mt. At the beginning of the session, LME zinc dipped to $2,868.5/mt, after which bulls increased positions, driving LME zinc to fluctuate upward above the daily moving average. During the night session, the center of LME zinc slightly moved downward below the daily moving average, then quickly rebounded to fluctuate around $2,940/mt, eventually closing higher at $2,944.5/mt, up by $70.5/mt or 2.45%. Trading volume increased to 47,147 lots, and open interest rose by 94 lots to 220,000 lots. Last Friday, LME zinc recorded a large bullish candlestick, with the middle Bollinger Band forming resistance above. LME zinc inventory decreased by 2,550 mt to 201,350 mt, a decline of 1.25%, marking a reduction in LME inventory. The pullback in the US dollar index and heightened expectations of an interest rate cut supported the slight upward movement of LME zinc. Trump is set to hold his inauguration ceremony today, and macro front developments should continue to be closely monitored.

Last Friday, the most-traded SHFE zinc 2503 contract opened at 24,275 yuan/mt. At the beginning of the session, bears increased positions, driving SHFE zinc downward below the daily moving average to a low of 24,025 yuan/mt. However, bulls increased positions, pushing SHFE zinc upward to a high of 24,360 yuan/mt, recording a "V-shaped" reversal. Subsequently, the center of SHFE zinc fluctuated rangebound around 24,300 yuan/mt, eventually closing higher at 24,305 yuan/mt, up by 80 yuan/mt or 0.33%. Trading volume decreased to 121,000 lots, while open interest increased by 861 lots to 105,000 lots. Last Friday, SHFE zinc recorded a long lower shadow bullish candlestick, with the 20-day moving average forming resistance above and the 5-day moving average providing support below. As the Chinese New Year approaches, downstream consumption is weakening, while domestic smelters' days of raw material inventories have rebounded, and processing fees have recovered, reducing supply-side imbalances. SHFE zinc may maintain a fluctuating trend in the short term, but macro developments should also continue to be closely monitored.