Zinc Prices Decline Amid Rising LME Inventory

Zinc Price

• LME: As of yesterday, LME zinc opened at $2,900/ton, hitting a high of $2,977.5/ton, ultimately closing down at $2,924/ton, a drop of $21/ton or 0.71%. Today, LME Zinc trading commenced at $2,924.5/ton.

• SHFE: As of yesterday, SHFE market was closed due the Mid-Autumn Festival holiday. Today, SHFE Zinc trading commenced at 23,915 yuan/ton.

• MCX: As of yesterday, Zinc prices opened at Rs 269.80/kg, reached the highest level of Rs 272.30/kg, lowest level at Rs 267/kg and finally closed down at Rs 267.50/kg, a drop of Rs 2.50 or 0.93%. Today, MCX Zinc trading commenced at Rs 267/kg.

  Zinc Supply & Demand

• LME Opening Stock - 247100 | Live Warrants - 222975 | Cancelled Warrants - 24125

• Overnight, LME inventory increased by 12,950 ton to 247,100 ton, an increase of 5.53%, indicating a significant rise in LME inventory. The expectation of a substantial US Fed rate cut has weakened, and attention will be focused on the upcoming US Fed rate decision. Swedish miner Boliden announced delays and increased costs for the expansion of its Odda zinc smelter in Norway, with full production now expected in 2025. This delay may contribute to tighter zinc supplies in the future. China's export growth moderated to 4.6% year-on-year in August 2024, reflecting the slow recovery of global demand. Meanwhile, zinc inventories in LME warehouses increased by 2.6% to 217,575 tons by the end of August. The global zinc market surplus narrowed to 8,700 metric tons in June, compared to 44,000 tons in May, indicating tightening supply conditions. However, China's refined zinc production fell sharply by 10.3% in July, with a total output of 489,600 tons, mainly due to disruptions caused by heavy rainfall and maintenance activities in key regions like Sichuan, Yunnan, and Henan.

Zinc News

• US August retail sales exceeded expectations, with the previous value slightly revised upward.
• During the Mid-Autumn Festival holiday, the domestic market was closed while LME zinc fluctuated at highs.
• The International Zinc Association predicts that India's zinc demand will double in less than a decade, driven by energy transition, battery technology, automobiles, infrastructure, and steel sectors. Currently consuming around 1.1 million tons of zinc, India is ahead of global consumption patterns.
• Hindustan Zinc outlines $2.5 bn expansion plan to double output, work to begin in FY26.

Expert Opinion

• Zinc has support at Rs 262.95, and a break below could lead to a test of Rs 260.5. On the upside, resistance is seen at Rs 272.05, and a move above that level could push prices towards Rs 277.20.