Zinc Prices Face Downward Pressure as Weak Demand and US Fed Meeting Loom

Zinc Ingots

18 Dec 20242 Min ReadDaily Market Report

Zinc prices have shown a downward trend across global markets, with LME, SHFE, and MCX all reporting losses. Trading volumes increased, but demand remains weak, especially from China. Zinc inventories dropped, while production in China slightly rose. The market is focused on the upcoming US Fed meeting, as macroeconomic factors continue to pressure prices.

Key Takeaways

Weak Market Sentiment: Zinc prices across LME, SHFE, and MCX show a downward trend due to weak demand, especially from China.
US Fed Focus: Market attention shifts to the US Fed’s monetary policy meeting, which could impact zinc prices further.
Supply and Demand Dynamics: Zinc supply remains relatively tight with declining inventories, but demand continues to be weak, limiting price recovery.
Chinese Market Impact: China’s weak consumption and decreased retail sales contribute to the overall bearish outlook for zinc prices.
Expert Opinion on Price Movement: Zinc is experiencing long liquidation with support at Rs 281.9, and further declines could test Rs 280.3.

Zinc Prices

LME: As of yesterday, LME zinc opened at $3,050.5/mt, reaching a high of $3,070/mt and low of $3,015/mt, and finally closed down at $3,036.5/mt, a decrease of $9.5/mt or 0.31%. Today, LME Zinc trading commenced at $3,033/mt.
SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 25,350 yuan/mt, reaching a low of 25,235 yuan/mt, finally a decrease of 185 yuan/mt or 0.73%. Today, SHFE Zinc trading commenced at 24,960 yuan/mt.
MCX: As of yesterday, MCX Zinc prices opened at Rs 286/kg, reached the highest level of Rs 286.30, lowest level at Rs 282.50/kg and finally closed down at Rs 283.45/kg, a decrease of 1.95 or 0.68%. Today, MCX Zinc trading commenced at Rs 283.25/kg.

Zinc Supply & Demand:

LME Opening Stock - 262100 | Live Warrants - 171225 | Cancelled Warrants - 90875
LME: Trading volume rose to 9,992 lots, open interest increased by 1,572 lots to 234,000 lots. LME zinc formed a bearish candlestick, with resistance at the 40-day MA and support at the 5-day MA. LME inventory decreased by 4,400 mt to 262,100 mt (-1.65%). Strong US retail sales data boosted the US dollar, pressuring zinc prices. Focus today is on the US Fed's decision.
SHFE: Trading volume dropped to 34,951 lots, open interest rose by 604 lots to 125,000 lots. SHFE zinc recorded three bearish candlesticks, with resistance from the 5-day and 10-day MAs. As supply constraints ease, demand remains better than expected. Zinc prices are expected to have limited downside.
MCX: Zinc prices fell 0.68% to Rs 283.45, pressured by weak demand in China. November retail sales growth underperformed, signaling weak consumption, while home prices continued to drop. Investor sentiment is subdued despite stimulus measures. Chinese exports and imports also shrank, adding to the bearish outlook.
Zinc inventories in Shanghai Futures Exchange warehouses fell 4.4%, while November refined zinc production in China increased slightly but was down 12% YoY. December production is expected to rise by 20,000 mt (5%). The global zinc market deficit narrowed to 79,500 mt in September from 85,000 mt in August.

Zinc News

LME zinc fluctuates downward, focus on US Fed monetary policy meeting decision.
MCX zinc prices fall amid weak Chinese demand and increased production.
Korea Zinc chairman loses friendly shares amid ownership battle. Choi estimated to hold only about 34% of shares to MBK-Young Poong alliance's 40%.

Expert Opinion

In experts’ opinion, zinc is experiencing long liquidation, with open interest falling by 8.74% to 2,181 contracts. Prices are supported at Rs 281.9, with further declines testing Rs 280.3. Resistance is seen at Rs 285.7, with a breakout potentially leading to Rs 287.9.