Shanghai Metals Market reported on October 12 that SHFE zinc futures demonstrated solid gains following strength in the London Metal Exchange, with the most-traded SHFE zinc 2611 contract opening higher with a gap in the night session. On the previous Friday, LME zinc opened at $3,718 per metric ton and rose throughout the session. The contract dipped to a low of $3,710/mt in early trading before reaching a high of $3,811.5/mt near the close, ultimately settling at $3,801.5/mt, representing an increase of $91.5/mt or 2.47%.
Trading volume declined to 13,406 lots, while open interest fell by 2,778 lots to 255,000 lots. LME zinc formed a bullish candlestick with support from the lower Bollinger Band. The 0-3 backwardation structure widened slightly from low levels, providing price support.
Bears reduced positions and the market rebounded notably from lows. On the Shanghai exchange, the most-traded SHFE zinc 2611 contract opened at 26,080 yuan per metric ton and consolidated at higher levels. The contract dipped to 26,040 yuan/mt in early trading and touched a high of 26,215 yuan/mt near the close, settling at 26,210 yuan/mt, up 280 yuan/mt or 1.08%.
Trading volume decreased to 50,372 lots with open interest falling by 1,658 lots to 106,000 lots. SHFE zinc formed a bullish candlestick with support from the 5-day moving average. The contract opened with a higher gap in the night session, driven by the LME rebound.
From a fundamental perspective, smelters displayed relatively weak production enthusiasm due to profit pressures, while downstream consumption remained mediocre. Market analysts expect continued consolidation as bulls and bears continue to wrestle for direction. LME inventory continued to consolidate, while short-term consolidation is expected to persist in both markets.
Source: Shanghai Metals Market (SMM). Data other than publicly available information are processed by SMM based on public information, market communication, and SMM's internal database models.
Source: news.metal.com