Zinc Prices Decline Amid Trade Concerns and Supply Pressure
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Zinc prices declined across LME, SHFE, and MCX due to weak Chinese trade data, escalating US-China trade tensions, and expectations of increased supply. While global zinc production has fallen for the third consecutive year, rising zinc concentrate TCs and anticipated production growth pressured prices. Experts suggest zinc is undergoing liquidation.
Industry Highlights
- Zinc Price Decline: Prices fell on LME, SHFE, and MCX, with LME closing at $2,882/mt, down 1.5%, and MCX closing at Rs 273.15/kg, down 0.96%.
- Supply Trends: LME inventories fell by 775 mt to 160,175 mt, while zinc production declined for the third consecutive year, tightening global supply.
- Trade and Tariff Concerns: Weak Chinese trade data and escalating US-China tensions pressured zinc prices, with US tariff policies raising fears of a global trade war.
- Market Indicators: Zinc saw long liquidation, with open interest on MCX dropping by 8.19% to 2,151 contracts, signalling reduced bullish sentiment.
- Expert Outlook: Zinc has support at Rs 271.5 and resistance at Rs 275.2; a breakout above Rs 275.2 could push prices toward Rs 277.2.
Zinc Prices
- LME: As of last Friday, LME zinc opened at $2,929/mt, reaching a high of $2,929/mt and low of $2,873.5/mt, and finally closed down at $2,882/mt, a decrease of $44/mt or 1.5%. Today, LME Zinc trading commenced at $2,887.65/mt.
- SHFE: As of last Friday, the most-traded SHFE zinc 2504 contract opened at 23,880 yuan/mt, reaching a high of 23,975 yuan/mt and a low of 23,820 yuan/mt, eventually closed down at 23,915 yuan/mt, a decrease of 45 yuan/mt or 0.19%. Today, SHFE Zinc trading commenced at 23,835 yuan/mt.
- MCX: As of last Friday, MCX Zinc prices opened at Rs 275.05/kg, reached the highest level of Rs 275.55/kg, the lowest level at Rs 271.85/kg and finally closed down at Rs 273.15/kg, a decrease of 2.65 or 0.96%. Today, MCX Zinc trading commenced at Rs 271.95/kg.
Zinc Supply & Demand
- LME Opening Stock - 160175 | Live Warrants - 133675 | Cancelled Warrants - 26500
- LME: Zinc trading volume fell to 11,584 lots, with open interest down by 3,265 lots to 220,000. LME zinc dropped, forming a bearish candlestick, but remained supported by the 5-day moving average. Inventories fell by 775 mt to 160,175 mt (-0.48%). A weak US dollar and high unemployment supported prices, but tariff concerns limited gains.
- SHFE: Zinc trading volume fell to 62,154 lots, with open interest down 3,328 lots to 86,292. SHFE zinc formed a bullish candlestick but faced resistance at the 5-day moving average. Despite destocking and rising demand, increasing zinc concentrate TCs and expected production growth pressured prices.
- MCX: Chinese imports and exports weakened, escalating US-China trade tensions. Global zinc production declined for the third straight year, with refined zinc output in China down 7%. Alaska’s Red Dog Mine slowdown could tighten supply in 2025. The zinc market moved into a 62,000 mt deficit in 2024, reversing a 310,000 mt surplus in 2023. While demand held at 13.6 million tons, declines in China, Europe, and the US were offset by growth in Brazil, India, and South Korea.
Zinc News
- SHFE Zinc centre slips; supply side is expected to increase.
- MCX Zinc prices declined by 0.96% to settle at Rs 273.15, pressured by weak trade data from China and concerns over the impact of volatile U.S. tariff policies.
- Korea Zinc shares jump as court move restarts battle for control.
- US President Donald Trump in an interview on Sunday declined to predict whether the US could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China over fentanyl. Trump’s trade policies have fuelled fears of a trade war, which could dampen economic growth and raise prices for Americans still reeling from years of high inflation. The short-term impact will be a rise in premiums as the US struggles to adjust to the dislocation in physical markets.
- The dollar began the day weak after significant losses last week due to a potentially weakening US labour market, while concerns over a global trade war led investors to safe havens, lifting the yen and the Swiss franc.
Expert Opinion
In experts’ opinion, zinc is undergoing long liquidation, as open interest dropped by 8.19% to 2,151 contracts. Support is seen at Rs 271.5, with a potential test of Rs 269.8, while resistance is likely at Rs 275.2, and a breakout above this could push prices toward Rs 277.2.
Daily Market Report
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