LME Zinc Posted an Increase Overnight, Eyes on US Inflation Data

SHANGHAI, Feb 14 (SMM) - On the news front, PetroChina was about to strike a large-scale liquefied natural gas (LNG) deal with Qatar. Federal Reserve Governor Bowman said that more interest rate hikes were needed to curb inflation, and the economy may have a "soft landing". Chinese Premier stressed that efforts shall be stepped up to promote economic recovery as China is still faced with multiple risks and challenges to stabilise its economy. The US stocks closed with a sharp increase, and investors awaited the release of the inflation data.

Overnight, LME zinc opened at $3,040/mt, hitting a low and high of $3,001/mt and $3,125.5/mt respectively, and closed at $3,117.5/mt, up $91.5/mt or 3.02%. Trading volume increased to 9,293 lots, and open interest fell 1,074 lots to 200,000 lots. LME zinc rose overnight, and found support at the middle of the Bollinger Bands. LME zinc inventory decreased by 325 mt to 25,925 mt, down 1.24%.

The US dollar was weak last night, and LME zinc gained momentum driven by longs after hitting its lowest level since January. Eyes shall be on the US inflation data released today.

The most-traded SHFE 2303 zinc contract opened at 22,960 yuan/mt overnight and fell to 22,835 yuan/mt before rallying to a peak of 23,200 yuan/mt. It eventually settled at 23,175 yuan/mt, up 160 yuan/mt or 0.7%. Trading volume reduced to 62,648 lots, and open interest gained by 531 lots to 86,051 lots.

As of yesterday, SMM zinc ingot social inventory increased by 2,300 mt to 187,800 mt compared with last Friday, indicating that the increase in inventory has slowed down. Upbeat sentiment on consumption elevated the average operating rate of downstream enterprises to a historical high level. It is expected that zinc prices will remain rangebound if no disturbance from major emergencies emerges.