Support from Supply Side Remains, SHFE Zinc Moves Upward after Opening Lower [SMM Morning Comment Oct 16]

US Fed's Daly: Monetary policy remains restrictive; the market increases bets on a significant 50 basis point interest rate cut by the central bank; Lebanon receives US assurance that Israel will reduce attacks; North Korea destroys parts of inter-Korean routes; the State Council Information Office will hold a real estate-related press conference on October 17; the Financial Regulatory Administration and the National Development and Reform Commission: establish a coordination mechanism to support financing for small and micro enterprises; the Ministry of Finance and other three departments: all water resource tax revenue will belong to local governments; the Shenzhen Stock Exchange strengthens regulation of program trading.

Overnight, LME zinc opened at $3,087/mt, initially reaching a high of $3,092/mt, then fluctuated downward to a low of $2,992/mt, before rebounding from the low to recover some losses, finally closing down at $3,052/mt, a decrease of $42.5/mt, or 1.37%. Trading volume decreased to 12,804 lots, and open interest decreased by 2,523 lots to 260,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the middle Bollinger Band providing support. LME zinc inventory decreased by 1,325 mt to 239,300 mt. The US dollar index fluctuated at highs, exerting continuous pressure, combined with the market having largely digested China's previous stimulus policy, poor macro sentiment dragged LME zinc's focus further down.

Overnight, the most-traded SHFE zinc 2411 contract opened at 24,800 yuan/mt, initially dipping to 24,780 yuan/mt, then fluctuated upward along the daily moving average, reaching a high of 25,150 yuan/mt near the close, finally closing up at 25,090 yuan/mt, an increase of 135 yuan/mt, or 0.54%. Trading volume decreased to 69,930 lots, and open interest decreased by 543 lots to 110,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average above forming resistance. The high futures market prices continued to suppress downstream consumption, yet the tight ore situation remained unchanged, with the supply side still supporting zinc prices. Additionally, the State Council Information Office will hold a press conference on Thursday regarding the promotion of stable and healthy development of the real estate market, which may stir market sentiment again. SHFE zinc opened lower and then moved upward throughout, with attention on the subsequent macro trend.