Consumption Gradually Entering Off-Season, SHFE Zinc Expected to Fluctuate in the Short Term [SMM Zinc Morning Comment]

SMM News, May 20:

Overnight, LME zinc opened at $3,517.5/mt. After the open, LME zinc fluctuated along the daily moving average, touching a high of $3,541.5/mt during the session before pulling back quickly from the high. Near the end of the session, LME zinc dipped to a low of $3,488/mt, then rebounded to near the daily moving average, ultimately closing down at $3,511/mt, down $4.5/mt or 0.13%. Trading volume decreased to 9,434 lots, and open interest decreased by 5,126 lots to 239,000 lots. Overnight, LME zinc posted a bearish candlestick, with the 5-day moving average forming resistance above. Expectations for US Fed interest rate hikes persisted, and the US dollar index strengthened from low levels, suppressing zinc price movements. LME zinc maintained a fluctuating trend, with the center edging down MoM.

Overnight, the most-traded SHFE zinc 2607 contract opened at 24,750 yuan/mt. At the start of the session, SHFE zinc touched a high of 24,750 yuan/mt. After the open, SHFE zinc pulled back in a fluctuating manner throughout the session, dipping to a low of 24,445 yuan/mt, then gradually rebounded from the low to near the daily moving average, ultimately closing down at 24,555 yuan/mt, down 150 yuan/mt or 0.61%. Trading volume decreased to 31,882 lots, and open interest increased by 3,867 lots to 85,524 lots. Overnight, SHFE zinc posted a bearish candlestick, with the 10-day moving average forming resistance above. On the fundamentals, declining zinc concentrate TCs provided some support for zinc prices, but as China gradually enters the traditional consumption off-season, zinc ingot consumption continues to weigh on price movements. Upward momentum for zinc prices remains insufficient, and prices are expected to maintain a fluctuating trend in the short term.

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