Zinc Faces Losses: Trading Volumes Rise, Prices Drop
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Zinc prices saw declines across major markets, with LME dropping by 1.68% and MCX by 1.6%. Trading volumes rose in LME and SHFE, but market volatility increased amid economic uncertainties and risk aversion. Zinc production in China rose, but the global deficit narrowed. The market faces pressure due to rising production and market uncertainty.
Key Takeaways
- Price Movement: LME zinc dropped by 1.68%, SHFE zinc rose by 0.72%, and MCX zinc decreased by 1.6%.
- Market Volatility: Rising trading volumes were accompanied by increased volatility due to risk aversion and economic uncertainties.
- China's Zinc Production: Zinc production in China increased by over 1% in December, with expectations for further growth despite maintenance cuts.
- US Economic Factors: President Trump’s calls for an interest rate cut added downward pressure to zinc prices globally.
- Support and Resistance: Experts foresee immediate support at Rs 269.4 for MCX zinc, with resistance at Rs 272.8.
Zinc Prices
- LME: As of yesterday, LME zinc opened at $2,892.5/mt, reaching a high of $2,894.5/mt and a low of $2,839/mt, and ultimately closing lower at $2,844.5/mt, down $48.5/mt or 1.68%. Today, LME Zinc trading commenced at $2,844/mt.
- SHFE: As of yesterday, the most-traded SHFE zinc 2503 contract opened at 23,760 yuan/mt, reached a high of 23,960 yuan/mt, low of 23,670 yuan/mt, and finally closed higher at 23,875 yuan/mt, up 170 yuan/mt or 0.72%. Today, SHFE Zinc trading commenced at 23,875 yuan/mt.
- MCX: As of yesterday, MCX Zinc prices opened at Rs 272.95/kg, reached the highest level of Rs 273.45, lowest level at Rs 270/kg and finally closed down at Rs 270.75/kg, a decrease of 4.40 or 1.60%. Today, MCX Zinc trading commenced at Rs 272.50/kg.
Zinc Supply & Demand
- LME Opening Stock - 191125 | Live Warrants - 142250 | Cancelled Warrants - 48875
- LME: Trading volume rose to 77,725 lots, but open interest fell by 2,540 lots to 217,000. Zinc prices recorded three consecutive losses as Trump is expected to demand an interest rate cut.
- SHFE: Trading volume dropped to 113,000 lots, with open interest down by 6,347 lots to 94,106. Market volatility increased due to uncertain policies, risk aversion, and the Chinese New Year break, causing downward pressure on zinc prices.
- MCX: Zinc prices dropped 1.6% to Rs 270.75 as the global zinc market deficit narrowed to 52,900 mt in November. Despite this, prices faced limited downside due to decreasing inventories in LME warehouses.
- China’s zinc production increased by over 1% in December, with further increases expected in January 2025, though some maintenance cuts could offset gains. On the demand side, China's industrial output improved in December, boosted by monetary stimulus.
Zinc News
- MCX Zinc declines amid narrowing market deficit and rising smelter production.
- US President Trump stated that he would ask the US Fed to immediately cut interest rates and urged Saudi Arabia and OPEC to lower oil prices.
- Korea Zinc held a special shareholders' meeting on Thursday to elect new board members, opening another chapter in a bitter four-month takeover battle for the world's top refined zinc producer.
Expert Opinion
In experts’ opinion, the market witnessed fresh selling, with open interest increasing by 4.41% to 1,421 contracts. Zinc has immediate support at Rs 269.4, and a break below could test Rs 268 levels. Resistance is seen at Rs 272.8, with a move above potentially pushing prices to Rs 274.8.
Daily Market Report
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Zinc Prices Drop Amid Market Uncertainty and Low Demand
Zinc prices declined last week across major markets, with LME zinc closing at $2,823.5/mt and MCX zinc falling to Rs. 269/kg. Demand has weakened, particularly during China’s New Year, while inventory levels remain a key factor. A narrowing global zinc deficit signals potential market shifts. The market is also awaiting clarity on U.S. tariff plans and upcoming policy decisions.
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Zinc Prices Rise; LME Inventory Drops to February 2024 Levels
Zinc prices saw a slight rise across LME, SHFE, and MCX markets, supported by falling inventories and global supply disruptions. The global market deficit widened, with ILZSG revising its 2024 outlook to a 164,000-mt deficit due to reduced output and weak Chinese demand. Experts predict resistance at Rs 279.5, with potential for further gains.
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