Zinc Market Shows Bearish Signals Despite Modest Gains in Demand

Zinc Ingots

05 Dec 20242 Min ReadDaily Market Report

Zinc prices saw minor fluctuations with slight declines in global markets. The LME, SHFE, and MCX prices all experienced minor losses. The supply side remains tight, with rising inventories and reduced trading volumes. While supply concerns continue, there are signs of further stimulus measures from China, which may support zinc prices in the short term.

Key Takeaways

Price Trends: Zinc prices showed a small decline in LME, SHFE, and MCX, with LME closing at $3,085/mt, SHFE at 25,360 yuan/mt, and MCX at Rs 287.40/kg.
Supply Tightness: Zinc inventories remain tight, with a drop in SHFE zinc stock and a slight increase in LME stock, highlighting the supply challenges.
Global Market Sentiment: Zinc prices rose slightly by 0.09% due to tight supply and hopes of new stimulus measures in China, even as global production remains relatively weak.
Expert Forecast: Experts see support at Rs 286.3 for MCX zinc, with resistance at Rs 288.6. Prices may continue to fluctuate, with potential upside if market conditions improve.
Production and Demand: Zinc production in China saw a 2% increase month-on-month, but the global zinc deficit persists, indicating continued supply pressures.

Zinc Prices

LME: As of yesterday, LME zinc opened at $3,095/mt, reaching a high of $3,112/mt and low of $3,070/mt, and ultimately closing down at $3,085/mt, a decrease of $14/mt or 0.45%. Today, LME Zinc trading commenced at 3,088.5/mt.
SHFE: As of yesterday, the most-traded SHFE zinc 2501 contract opened at 25,385 yuan/mt, reaching a high of 25,480 yuan/mt, low of 25,270 yuan/mt, and ultimately closing down at 25,360 yuan/mt, a decrease of 105 yuan/mt or 0.41%. Today, SHFE Zinc trading commenced at 25,550 yuan/mt.
MCX: As of yesterday, MCX Zinc prices opened at Rs 286.60/kg, reached the highest level of Rs 288.50, lowest level at Rs 286.20/kg and finally closed down at Rs 287.40/kg, an increase of 0.25 or 0.09%. Today, MCX Zinc trading commenced at Rs 287.60/kg.

Zinc Supply & Demand

LME Opening Stock - 278100 | Live Warrants - 171500 | Cancelled Warrants - 106600

LME: Trading volume fell to 9,433 lots, while open interest rose by 231 lots. Zinc saw slight fluctuations with inventory up by 100 mt to 278,100 mt. Expect further fluctuations today.
SHFE: Trading volume dropped to 72,685 lots, with open interest down by 1,296 lots. Zinc showed a bearish candlestick, with support from the 10-day moving average.
MCX: SHFE zinc inventories fell 10.6% week-on-week, highlighting tight supply. Winter stockpiling is restricting ore supplies, although improved smelter production and easing zinc concentrate shortages provided some relief.

Zinc production in China rose 2% month-on-month in September but was still down 8% year-on-year. A large zinc withdrawal from LME warehouses raised prices. The global zinc deficit narrowed to 79,500 mt in September.

Zinc News

(1) Zinc prices rose marginally by 0.09% to settle at Rs 287.4, supported by supply tightness and hopes of additional stimulus measures from China after modest expansion in factory activity during November.

(2) MBK Partners and Young Poong refute Korea Zinc's baseless claims.

Expert Opinion

In experts’ opinion, the zinc market is under fresh buying, evidenced by a 6.17% rise in open interest to 3,166 contracts. Prices are supported at Rs 286.3, with further downside potential to Rs 285.1. Resistance is seen at Rs 288.6, and a breakout above this level could push prices to Rs 289.7.