Zinc Price Center Moved Higher, Focus on the Peak Consumption Season and Smelter Raw Material Supply [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,185.5/mt. In early trading, it fluctuated around the daily average line, dipped to $3,158/mt during European trading hours, and then rose all the way in the night session as bulls added to positions, with the center moving up to around $3,220/mt. It finally closed higher at $3,214/mt, up $32/mt or 1.01%. Trading volume increased to 13,644 lots, and open interest increased by 1,851 lots to 210,000 lots. Overnight, LME zinc posted a three-day winning streak, with the 20-day moving average providing support below and the 40/60-day moving averages forming resistance above. Overnight, as the geopolitical conflict in the Middle East was likely to de-escalate, the US dollar index moved lower and base metals rose. Meanwhile, LME zinc inventory continued destocking, and the LME Cash-3M structure fluctuated near a small contango, leaving structural risks still in place and pushing zinc prices higher throughout the session.

Overnight, the most-traded SHFE zinc 2605 contract opened at 23,555 yuan/mt. After dipping to 23,515 yuan/mt in early trading, SHFE zinc rose all the way as bulls added to positions, and finally closed at the intraday high of 23,695 yuan/mt, up 130 yuan/mt or 0.55%. Trading volume decreased to 37,739 lots, and open interest decreased by 528 lots to 91,015 lots. Overnight, the most-traded SHFE zinc contract recorded a full-bodied bullish candlestick, with the 5/10-day moving averages providing support below. Driven by the external market overnight, zinc prices fluctuated upward. However, on the fundamentals side, production at domestic smelters in April is expected to increase by more than 10,000 mt MoM. At elevated zinc prices, downstream enterprises showed weaker purchasing enthusiasm, inventory destocking slowed down, and weak domestic fundamentals are expected to cap further gains. Attention should be paid to peak-season consumption performance and raw material supply at smelters.

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