SMM Zinc Morning Comment: Macroeconomic sentiment is bullish, SHFE zinc moves upward

Overnight, this round of Gaza ceasefire negotiations ended, and the Israeli army may still march into Gaza; San Francisco Fed President Daly: If the labor market deteriorates, interest rate cuts may be considered; the number of initial jobless claims in the United States last week was the highest since August 2023; the leader of the Yemeni Houthi armed forces: will target any ships related to companies that supply or transport goods to Israel; Bank of England Governor Bailey: the possibility of a June interest rate cut has neither been ruled out nor planned, and the extent of the cut may exceed market pricing; China-Hungary relations have been upgraded to an all-weather comprehensive strategic partnership in the new era; the Financial Regulatory Authority issued guiding opinions on the banking and insurance industries to do a good job in the "five major articles" of finance; city commercial banks took the lead in launching a new round of deposit listing rate cuts; Hangzhou and Xi'an have completely cancelled housing purchase restrictions.

Overnight, LME zinc opened at $2908/mt, hitting a low and high of $2868/mt and $2932/mt respectively, and closed at $2910/mt, up $4/mt or 0.15%. Trading volume decreased to 8501 lots, and open interest fell1206 lots to 238,000 lots. LME zinc inventory dropped by 625 mt or 0.25% to 252125 mt. A weaker US dollar helped non-ferrous metals prices rise. It is expected that LME zinc will consolidate rangebound today.

The most-traded SHFE 2406 zinc contract opened at 23265 yuan/mt overnight and fell to 22915 yuan/mt before rallying to a peak of 23215 yuan/mt. It eventually closed at 23345 yuan/mt, up 140 yuan/mt or 0.6%. Trading volume grew to 73254 lots, and open interest decreased by 3355 lots to 79691 lots. According to SMM research, as of Thursday this week, the total zinc ingot inventory of seven regions in China was 212,900 tons, a decrease of 3,400 tons from May 6. Domestic inventory decreased, and domestic zinc concentrate TCs continued to decline, providing bottom support for zinc prices. On the macro side, the US dollar weakened and was more bullish, and SHFE zinc is expected to fluctuate rangebound.