SMM Zinc Market Morning Comment (Apr 23) 

ECB Governing Council Member Centeno said that the interest rate cut may exceed 100 basis points. The market has fully expected that the Bank of England will cut interest rates of 25 basis points in August for the first time. Iranian Foreign Ministry spokesman said that Israel has received the necessary response at this stage. Polish President said that Poland is ready to deploy nuclear weapons. US Secretary of State Blinken will visit China from April 24 to 26. The People's Bank Of China will maintain the one-year and five-year LPR unchanged. Ministry of Finance of China will timely launch ultra-long-term special government bond issuance. The State Council conducted the seventh special study on deepening capital market reform.

Overnight, LME zinc opened at $2,852/mt, and rose to $2,873/mt, but then fell back to $2,801.5/mt before closing at $2826.5/mt, down $24.5/mt or 0.86%. Trading volume fell to 9,698 lots, and open interest increased by 2,545 lots to 243,000 lots. LME zinc inventory decreased by 25 mt to 256,175 mt, a drop of 0.01%. The strong US dollar index weighed on LME zinc. The macro sentiment cooled down, and LME zinc prices fluctuated at a high level. We need to keep an eye on manufacturing PMI data to be released overseas.

Overnight, the most-traded SHFE 2406 zinc contract fell to 22,355 yuan/mt after opening at 22,450 yuan/mt, but then rose to 22,680 yuan/mt before closing at 22,590 yuan/mt, down 140 yuan/mt or 0.62%. Trading volume decreased to 97,676 lots, and open interest decreased by 3,174 lots to 119,000 lots. Due to high zinc prices, downstream was not willing to purchase, putting pressure on SHFE zinc price hikes. We should pay attention to the downstream consumption and restocking during the Labour Day holiday.