Market Sentiment Mixed, SHFE Zinc Hovers at Highs [SMM Zinc Morning Comment]

Overnight, LME zinc opened at $3,545/mt. Early in the session, LME zinc moved sideways around the daily average line, edging down briefly below $3,542.5/mt before rebounding and strengthening continuously. Late in the session, it touched a high of $3,585/mt, ultimately closing up at $3,582.00/mt, up $38.5/mt or 1.09%. Trading volume increased to 125,000 lots, while open interest decreased by 212 lots to 230,000 lots. On June 1, LME zinc inventory decreased by 500 mt to 113,300 mt, a decline of 0.44%. Overnight, LME zinc posted a bullish candlestick, with the upper Bollinger Bands rail exerting pressure above and the middle Bollinger Bands rail providing support below. The market was still digesting numerous developments regarding Middle East peace negotiations. Trump indicated that a deal could be reached within the next week, and overall sentiment was relatively positive, pushing the LME zinc price center higher.

Overnight, the most-traded SHFE zinc 2607 contract opened higher with a gap at 24,880 yuan/mt. Early in the session, SHFE zinc briefly touched a high of 24,925 yuan/mt before pulling back to a session low of 24,735 yuan/mt. However, bears reducing positions supported SHFE zinc to rebound and recover part of the losses, ultimately closing up at 24,780 yuan/mt, up 60 yuan/mt or 0.24%. Trading volume decreased to 51,326 lots, while open interest decreased by 967 lots to 105,000 lots. According to SMM market communication, as of June 1, China's inventory increased by 3,700 mt to 264,600 mt. Overnight, SHFE zinc posted a small bearish candlestick, with the upper Bollinger Bands rail exerting pressure above and the 20/60-day moving averages providing support below. Overnight, SHFE zinc opened higher driven by LME, but domestic end-use consumption showed clear off-season characteristics with insufficient underlying support, and prices pulled back in a volatile manner. Given the intertwined bullish and bearish fundamentals, SHFE zinc is expected to continue to hold up well.

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