Domestic Chinese New Year Approaching, SHFE Zinc Records a Large Bearish Candle [SMM Zinc Morning Comment]

Last Friday, Ukrainian President: US military aid to Ukraine has not stopped; Putin: Willing to discuss the Russia-Ukraine conflict and energy issues with Trump; White House: The Lebanon-Israel ceasefire agreement will remain effective until February 18, 2025; Foreign media: Houthi forces are considering banning US ships from passing through the Bab-el-Mandeb Strait as "retaliation"; Bank of Japan raised interest rates to the highest level in 17 years; The central bank conducted a 1-year MLF operation of 200 billion yuan; In the first month of the new real estate tax policy implementation, an additional tax reduction of 11.69 billion yuan was achieved.

Last Friday, LME zinc opened at $2,850/mt. At the beginning of the session, LME zinc fluctuated upward above the daily moving average, reaching a high of $2,895/mt. Subsequently, with bears increasing positions, LME zinc fluctuated downward below the daily moving average, recording a "V" reversal and hitting a low of $2,822.5/mt at the end of the session, closing down at $2,823.5/mt, a decrease of $21/mt or 0.74%. Trading volume decreased to 73,040 lots, while open interest increased by 1,642 lots to 219,000 lots. Last Friday, LME zinc recorded a long upper shadow bearish candlestick, with resistance formed by the 20-day and 60-day moving averages above, and support provided by the lower Bollinger Band below. On the same day, LME zinc inventory decreased by 2,700 mt to 188,425 mt, a decline of 1.41%. The US Fed is expected to keep interest rates unchanged at the upcoming monetary policy meeting and deliver a neutral message for the March meeting. The market awaits more data and information on Trump's policies. LME zinc is expected to maintain a fluctuating trend in the short term, awaiting further macro data guidance.

Last Friday, SHFE zinc opened at 23,900 yuan/mt, reaching a high immediately after the opening. At the beginning of the session, with bears increasing positions, SHFE zinc fluctuated downward below the daily moving average, hitting a low of 23,530 yuan/mt at the end of the session and closing down at 23,530 yuan/mt, a decrease of 345 yuan/mt or 1.45%. Trading volume decreased to 60,670 lots, while open interest increased by 4,344 lots to 98,450 lots. Last Friday, SHFE zinc recorded a bearish candlestick, with resistance formed by the 10-day and 20-day moving averages above, and support provided by the middle Bollinger Band below. Due to the Chinese New Year, end-use consumption in the zinc downstream sector weakened significantly, reducing support for zinc prices. In the short term, zinc prices are expected to fluctuate downward.