LME Zinc Up, SHFE Pressured by Rising Stocks; Trump’s New Tariffs Impact Metals Market

Key Takeaways

• LME Zinc Gains: Prices went up 0.42% to $2,854/mt, supported by low inventory despite pressure from a strong dollar and rising US steel tariffs.
• SHFE Zinc Under Pressure: Prices remained steady but faced downward pressure from rising inventories, which surged 81.8% since January 24.
• MCX Zinc Edges Lower: Prices fell 0.02% to Rs 270.75/kg, impacted by higher inventories and global production declines for the third consecutive year.
• Global Zinc Deficit: The market recorded a 52,900-mt deficit in November, narrowing from October, with January-February output expected to drop further.
• Trump’s Tariff Impact: The announcement of 25% tariffs on all steel and aluminum imports could create further volatility in the metals market.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,843/mt, reaching a high of $2,854.5/mt and a low of $2,822/mt, and ultimately closed higher at $2,854/mt, up by $12/mt or 0.42%. Today, LME Zinc trading commenced at $2,847.6/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2503 contract opened at 23,730 yuan/mt, hitting a high of 23,815 yuan/mt and a low of 23,670 yuan/mt, and ultimately closed lower at 23,785 yuan/mt, down by 20 yuan/mt or 0.08%. Today, SHFE Zinc trading commenced at 23,745 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 270.80/kg, reached the highest level of Rs 271.30, lowest level at Rs 268.50/kg and finally closed down at Rs 270.75/kg, a decrease of 0.05 or 0.02%. Today, MCX Zinc trading commenced at Rs 269.85/kg.

Zinc Supply & Demand

• LME Opening Stock - 168700 | Live Warrants - 134225 | Cancelled Warrants - 34475
• LME: Zinc trading volume fell to 5,937 lots, while open interest rose by 1,080 lots to 227,000. LME zinc stayed high, supported by low inventory, despite pressure from rising US steel tariffs and a stronger dollar.
• SHFE: Trading volume dropped to 40,277 lots, with open interest down by 127 lots to 92,416. SHFE zinc remained strong, supported by the 10-day moving average, as downstream demand recovered post-holiday despite rising inventories.
• MCX: Zinc edged down 0.02% to Rs 270.75, pressured by an 81.8% surge in SHFE-monitored inventories since January 24. Supply concerns limited losses as global zinc production declined for the third consecutive year, with
• China’s refined zinc output down 7% and Alaska’s Red Dog Mine set to cut production in 2025.
• The global zinc market had a 52,900-mt deficit in November, narrowing from October’s 65,400-mt shortfall. For January-November 2024, the deficit was 33,000 mt, reversing the 312,000-mt surplus of 2023. China’s refined zinc output rose 1% MoM in January but fell 8% YoY. February output is expected to drop over 8% MoM, with a 6% YoY decline in January-February due to holiday shutdowns and maintenance.

Zinc News

• MCX Zinc dropped as inventories rose 81.8% from last release on Jan 24.
• Downstream consumption gradually recovers, SHFE Zinc maintains fluctuating trend.
• Trump said he would introduce new 25% tariffs on all steel and aluminium imports into the United States, which would come on top of existing metals duties, in another major escalation of his trade policy overhaul. Trump said he would announce reciprocal tariffs on Tuesday or Wednesday, to take effect almost immediately, applying them to all countries and matching the rates levied by each country.

Expert Opinion

In experts’ opinion, the market is under long liquidation, with open interest dropping by 0.81% to 2,819 contracts. Zinc is finding support at Rs 269.1, with a break below potentially testing Rs 267.4. Resistance is at Rs 271.9, with a move above possibly leading to Rs 273.