Zinc Market Update: LME, MCX and SHFE Prices Fall as Supply Tensions Ease

Key Takeaways

• Zinc prices have dropped across multiple exchanges, with LME, SHFE, and MCX prices all experiencing declines.
• China's zinc production has been impacted by weak industrial profits, leading to a decrease in demand and slowing production growth.
• Despite easing supply fears, challenges such as raw material shortages and weak demand from China continue to weigh on zinc prices.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $3,085.5/mt, low of $2,960/mt, and finally closing down at $2,966/mt, a drop of $144.5/mt, or 4.65%. Today, LME Zinc trading commenced at 2,984.5/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2412 contract opened at 24,665 yuan/mt, hitting a high of 24,880 yuan/mt and a low of 24,605 yuan/mt, SHFE zinc finally closed down at 24,800 yuan/mt, a drop of 155 yuan/mt, or 0.62%. Today, SHFE Zinc trading commenced at 25,170 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 286/kg (the highest level), lowest level at Rs 277.75/kg and finally closed down at Rs 278.55/kg, a decrease of 9.30 or 3.23%. Today, MCX Zinc trading commenced at Rs 282.70/kg.

Zinc Supply & Demand

• LME Opening Stock - 245325 | Live Warrants - 238550 | Cancelled Warrants - 6775
• LME: Trading volume increased to 14,908 lots, while open interest dropped to 247,000 lots. Zinc recorded a bearish trend, with inventory down by 350 mt. A stronger USD following Trump’s policies drove base metals lower, including LME zinc, which is expected to fluctuate today.
• SHFE: Trading volume fell to 86,425 lots, with a bullish candlestick for zinc. Concerns about US policies impacted exports, likely keeping SHFE zinc volatile today.
• MCX: Zinc dropped 3.23% to 278.55 as inventory eased supply concerns. The premium on cash contracts narrowed as stocks rose to 242,425 tons, but raw material shortages limit gains.
• Additionally, China’s industrial profits dropped in September, highlighting weak demand and falling producer prices.
• Russian zinc producer Ozernoye faces sanctions-related challenges, jeopardizing its 2025 target of 320,000 metric tons. China’s refined zinc output rose 2% month-on-month but fell 8% year-on-year; modest growth is expected in October, mainly in Inner Mongolia, Shaanxi, and Hunan.

Zinc News

• The SHFE zinc market has shifted downward, reflecting a broader bearish sentiment across commodities.
• MCX zinc prices have fallen as inventory inflows have alleviated previous concerns over potential supply shortages.
• Hanwha Energy Corp., part of the Hanwha Group, has signed an agreement to acquire 5.4 million Hanwha Corp. shares from Korea Zinc in a block trade valued at 152 billion won ($108 million).
• China’s Zinc Smelter Purchasing Team (CZSPT) has set the domestic processing fees for zinc concentrate at between 2,000 yuan ($281.57) and 2,500 yuan per metric ton for the first quarter of 2025, according to the Media reports. The new fees reflect the industry’s ongoing challenges, including a tight ore supply and declining smelting margins.

Expert Opinion

• In experts’ opinion, zinc is experiencing fresh selling, with open interest rising by 6.84% to 3,094. Support is seen at 275.6, with further potential down to 272.5, while resistance lies at 283.9; breaking this level could lead prices to test 289.1. This indicates continued caution in the market amidst easing supply concerns and production challenges.