Zinc Markets Show Positive Movements Amid Tight Supply and Chinese Stimulus
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Zinc prices have been on the rise, supported by falling LME stocks and positive sentiment surrounding Chinese economic stimulus measures. The market shows signs of tightness, with reduced inventories and short covering. Despite global production deficits, a stronger U.S. dollar and uncertainties surrounding U.S. tariffs have capped further gains.
Key Insights
- LME Zinc Trades Higher: LME zinc closed at $2,862.5/mt, marking a 0.09% increase, with today’s trading opening slightly higher at $2,866/mt.
- SHFE Zinc Up by 0.29%: The SHFE zinc 2502 contract closed at 24,215 yuan/mt, a gain of 70 yuan/mt, with today's opening at 24,205 yuan/mt.
- MCX Zinc Prices Rise: MCX zinc prices increased by 0.55%, closing at Rs 273.05/kg, driven by optimism around China’s economic measures and falling inventories.
- Zinc Market Tightens: LME inventory dropped 1.3%, and global zinc production saw a 3.8% decrease, exacerbating supply tightness.
- Expert Outlook on Zinc: Experts expect further short covering in the zinc market, with support at Rs 271.5 and resistance at Rs 274.7.
Zinc Prices
- LME: As of last Friday, LME zinc opened at $2,854.5/mt, reaching a high of $2,906/mt and a low of $2,870/mt. It ultimately closed higher at $2,862.5/mt, up by $2.5/mt or 0.09%. Today, LME Zinc trading commenced at $2,866/mt.
- SHFE: As of last Friday, the most-traded SHFE zinc 2502 contract opened at 24,300 yuan/mt, reached a high of 24,355 yuan/mt and a low of 24,145 yuan/mt. It ultimately closed higher at 24,215 yuan/mt, up by 70 yuan/mt or 0.29%. Today, SHFE Zinc trading commenced at 24,205 yuan/mt.
- MCX: As of last Friday, MCX Zinc prices opened at Rs 271.70/kg, reached the highest level of Rs 274.95, lowest level at Rs 271.70/kg and finally closed down at Rs 273.05/kg, an increase of 1.50 or 0.55%. Today, MCX Zinc trading commenced at Rs 273.30/kg.
Zinc Supply & Demand
- LME Opening Stock - 214075 | Live Warrants - 162200 | Cancelled Warrants - 51875
- LME: Trading volume decreased to 11,363 lots, while open interest increased by 1,351 lots to 218,000 lots. Last Friday, LME zinc formed a long upper shadow candlestick, with resistance from various moving averages above. LME inventory decreased by 2,825 mt to 214,075 mt, a drop of 1.3%, marking a reduction in LME inventory.
- SHFE: Trading volume decreased to 69,302 lots, while open interest decreased by 388 lots to 97,533 lots. Last Friday, SHFE zinc formed a bearish candlestick, but the MACD bearish bars narrowed. After falling below the previous low of 24,000 yuan/mt, SHFE zinc lacked sufficient downward momentum due to continued destocking in social inventory, maintaining a primarily low-level fluctuation.
- MCX: Zinc prices increased by 0.55%, settling at Rs 273.05, as market sentiment improved on expectations of China’s enhanced monetary and fiscal measures to bolster economic growth. This optimism partially offset uncertainties surrounding U.S. President-elect Donald Trump’s tariff threats, which continue to loom over commodity markets.
- Zinc inventories monitored by the Shanghai Futures Exchange fell sharply, down 20.9% from last Friday, providing further support to prices. On the production side, domestic refined zinc output in December 2024 is expected to rise by over 20,000 mt month-on-month (5%), despite a cumulative annual decrease of more than 6%. Notably, production exceeded expectations in regions like Qinghai, Inner Mongolia, Xinjiang, Hunan, and Shaanxi.
- Global zinc market dynamics remain tight, with the deficit expanding to 69,100 mt in October from 47,000 mt in September, according to the ILZSG. However, the first ten months of 2024 still recorded a surplus of 19,000 mt, significantly lower than last year’s surplus of 356,000 mt. Declining mine output in key regions like Canada, China, South Africa, and Peru drove a 3.8% decrease in global zinc production in January-October.
Zinc News
- Strong non-farm payrolls data reinforced expectations that the US Fed would not implement significant interest rate cuts this year. A stronger US dollar limited the upside room for LME zinc.
- MCX Zinc prices rise on optimism over Chinese stimulus and reduced inventories.
Expert Opinion
In experts’ opinion, zinc is witnessing short covering, with a significant drop in open interest by 14.01% to 2,768 contracts, while prices increased by Rs 1.5. Support is seen at Rs 271.5, with further downside potential to Rs 270. Resistance is pegged at Rs 274.7, and a breakout could push prices to Rs 276.4.
Daily Market Report
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Zinc Market Update: Prices Rise on LME, Decline on SHFE & MCX
Zinc prices showed mixed movements across global markets. LME saw a 1.33% increase, while SHFE and MCX saw minor declines. Global zinc markets are facing a supply deficit, and uncertainties, such as U.S. tariffs, are affecting investor sentiment. Additionally, refined zinc production in China showed growth, while stockpiling and inventory dynamics provided market support.
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Zinc Prices Drop Amid Uncertainty Over US Tariffs, Economic Slowdown and Weak Chinese Demand
Zinc prices saw a decline due to tariff uncertainty, weak economic outlook, and imbalances in supply and demand. LME Zinc dropped by 1.96%, with the SHFE and MCX markets following similar downward trends. Zinc inventories in key markets also saw declines, indicating supply-side challenges.
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