Zinc Prices Drop Amid Uncertainty Over US Tariffs, Economic Slowdown and Weak Chinese Demand

Key Takeaways

• Zinc Price Decline: LME Zinc fell by 1.96% to $2,874/mt, SHFE dropped by 1.14%, and MCX Zinc fell by 1.61% on global market concerns.
• Supply & Demand Imbalances: LME zinc inventories dropped 1.78%, while SHFE zinc production decreased by 12% year-on-year, signalling global market tightening.
• Tariff Uncertainty Impact: US tariff policies and a stronger US dollar contributed to downward pressure on zinc prices, especially in the MCX and SHFE markets.
• Economic Outlook: Weak Chinese economic growth, declining export orders, and reduced global zinc production are putting pressure on market sentiment.
• Expert Insights: Support is predicted at Rs 267, with resistance around Rs 273.2; further declines may test lower levels, but market sentiment remains cautious.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,874/mt, reaching a high of $2,882/mt and a low of $2,822.5/mt, down by $56.5/mt or 1.96%. Today, LME Zinc trading commenced at $2,828/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 24,070 yuan/mt, reached a high of 24,080 yuan/mt and a low of 23,815 yuan/mt, eventually closed lower at 23,950 yuan/mt, down by 275 yuan/mt or 1.14%. Today, SHFE Zinc trading commenced at 24,155 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 272.90/kg, reached the highest level of Rs 274.25/kg, the lowest level at Rs 268/kg and finally closed down at Rs 269.50/kg, a decrease of 4.40 or 1.61%. Today, MCX Zinc trading commenced at Rs 270.15/kg.

Zinc Supply & Demand

• LME Opening Stock - 220525 | Live Warrants - 171575 | Cancelled Warrants - 48950
• LME: Trading volume rose to 14,595 lots, but open interest decreased by 2,118 lots to 216,000. LME zinc recorded a bearish candlestick with resistance at the 5-day moving average. Zinc inventory dropped by 1.78% to 220,525 mt. Ongoing uncertainty about US tariff policies and a stronger US dollar put downward pressure on zinc prices.
• SHFE: Trading volume increased to 99,888 lots, with open interest up by 100 lots to 103,000. SHFE zinc recorded a bullish candlestick, but the market continued to decline due to global trends and domestic supply-demand imbalances.
• MCX: Zinc prices fell 1.61% to Rs 269.5, impacted by uncertainty about US tariffs on China. Concerns over weak Chinese economic growth and declining export orders weighed on sentiment, although expectations that Trump’s tariffs may be less aggressive limited the downside. Zinc inventories in Shanghai Futures Exchange warehouses fell by 20.9%. China's refined zinc production rose slightly in November but saw a 12% annual decline, with overall 2024 production down 6%. Global zinc mine production decreased by 3.8% from January to October. The global zinc market had a deficit of 69,100 mt in October.

Zinc News

• Korea Zinc’s acquisition of Igneo Holdings prompts scrutiny over substantial profits.
• MCX Zinc declines on tariff uncertainty and weak economic outlook.
• Korea Zinc in talks with US buyers to supply antimony.

Expert Opinion

In experts’ opinion, the market witnessed fresh selling as open interest rose by 2.84% to 3,727 contracts. Zinc has support at Rs 267, with further declines potentially testing Rs 264.4. Resistance is expected at Rs 273.2, with a breakout targeting Rs 276.8.