Economic Recession Concerns Shift LME Zinc Prices Downward [SMM Zinc Morning Comment Aug 6]

Overnight, global assets experienced a "Black Monday"! Foreign media reported that Iran might attack Israel within 24 to 48 hours; US officials stated that the Asad Air Base in western Iraq was attacked; US Fed officials mentioned that the Fed's duty is not to react to one month's employment data, and its policy mandate is unrelated to the stock market; it was reported that Libya's largest oil field, the Sharara oil field, was completely shut down on Monday; China's Caixin Services PMI for July showed an accelerated expansion in the service sector; China's 10-year government bond yield once fell below 2.1%; the offshore yuan surged over 700 points against the dollar during the day; the central bank of China and five other departments announced support for eligible seed companies to list, raise funds, and refinance; the Shanghai headquarters of the central bank guided banks to reasonably adjust deposit rates; further expanded the cross-border use of the yuan; and strengthened monitoring and analysis of the real estate market and financial situation.

Overnight, LME zinc opened at $2,646.5/mt. At the beginning of the session, bulls had the upper hand in the tug-of-war, pushing LME zinc to a high of $2,692.5/mt. Subsequently, as bulls took profits and exited, LME zinc fluctuated downward, operating below the average daily line. Approaching the night session, it dipped to $2,563/mt. Entering the night session, LME zinc rebounded from the bottom, consolidating around $2,635/mt, and finally closed lower at $2,642/mt, down $20/mt, a decrease of 0.75%. Trading volume increased to 15,188 lots, and open interest decreased by 1,185 lots to 220,000 lots. LME zinc's various moving averages above form resistance. Overnight, LME zinc inventory decreased by 2,775 mt to 229,775 mt, a drop of 1.19%, continuing the trend of declining LME inventory. Due to recession concerns, global stock markets sold off, manifesting a "Black Monday," causing LME zinc price to shift downward. However, the US Fed's downplaying of recession concerns limited the decline in LME zinc.

Overnight, the most-traded SHFE zinc 2409 contract opened lower at 22,020 yuan/mt. At the beginning of the session, SHFE zinc quickly dipped to 21,975 yuan/mt, then as bears took profits and exited, SHFE zinc corrected upward, fluctuating upward throughout the session. By the end of the trading session, the focus shifted upward to 22,290 yuan/mt, and finally closed lower at 22,300 yuan/mt, down 230 yuan/mt, a decrease of 1.02%. Trading volume decreased to 115,000 lots, and open interest decreased by 339 lots to 89,074 lots. Overnight, SHFE zinc recorded a small bullish candlestick, but the daily K-line focus shifted downward. Overnight, driven by LME zinc, SHFE zinc corrected from a low level. Fundamentally, tight supply supported zinc prices, and SMM social inventory remained low, providing support for zinc prices. In the short term, attention should be paid to macro sentiment disturbances.