Tight Ore Supply Support Remains, SHFE Zinc Hovers at High Levels [SMM Zinc Morning Comment]

US business activity saw the largest increase in two years; Russia seeks compensation from the US for losses to its central bank; SEC approves key documents for a spot Ethereum ETF; Starwood Property Trust tightens investor redemption restrictions; China responds to questions about more punitive exercises around Taiwan; Alibaba plans to issue $4.5 billion in convertible senior notes.

Overnight, LME zinc opened at $3,056.5/mt, initially fell to a low of $3,011/mt, then rebounded, reaching a high of $3,088/mt, and eventually closing down at $3,052.5/mt, down $4.5/mt, or 0.15%. Trading volume decreased to 9,043 lots, and open interest decreased by 5,829 lots to 236,000 lots. LME zinc stocks remained flat at 257,625 mt. The preliminary S&P Global Composite PMI for the US in May exceeded expectations, rising to 54.4. Strong economic data dampened rate cut expectations, slightly weighing on LME zinc.

Overnight, the most-traded SHFE zinc 2407 contract opened at 24,455 yuan/mt. Initially, increased long positions drove SHFE zinc up to a high of 24,710 yuan/mt, then it dipped to a low of 24,450 yuan/mt, eventually closing up at 24,565 yuan/mt, up 90 yuan/mt, or 0.37%. Trading volume decreased to 118,000 lots, and open interest increased by 1,348 lots to 123,000 lots. Recently, TCs in June have entered a concentrated negotiation period, and domestic and imported zinc concentrate TCs may continue to decline. Tight ore supply continues to support zinc prices, with SHFE zinc hovering at high levels.