Zinc Prices Fall Amid Mixed Global Market Trends

Zinc Prices

• LME: As of last Friday, LME zinc opened at $2,880/mt, hitting a high of $2,890/mt and low of $2,820.5/mt, finally closing down at $2,833.5/mt, a decrease of $66/mt or 2.28%. Today, LME Zinc trading commenced at $2,831.5/mt.

• SHFE: As of last Friday, the most-traded SHFE 2410 zinc contract opened at 24,045 yuan/mt, reaching a high of 23,755 yuan/mt and a low of 23,600, finally closing up at 23,730 yuan/mt, an increase of 100 yuan/mt or 0.42%. Today, SHFE Zinc trading commenced at 23,675 yuan/mt.

• MCX: As of last Friday, Zinc prices opened at ₹ 267.55/kg, reached the highest level of ₹267.55/kg, the lowest level at ₹264/kg, and finally closed down at ₹264.80/kg, a drop of ₹3.90 or 1.45%. Today, MCX Zinc trading commenced at ₹264.05/kg.

Zinc Supply & Demand

• LME Opening Stock - 243225 | Live Warrants - 217575 | Cancelled Warrants - 25650

• LME trading volume decreased to 8,465 lots, and open interest increased by 18 lots to 220,000 lots. Overnight, LME zinc recorded a bearish candlestick, with LME inventory decreasing by 1,550 mt to 243,225 mt, a drop of 0.63%. The market reduced its expectations for the US Fed's rate cut in September, coupled with manufacturing data concerns, causing LME zinc's focus to shift downward. Attention can be paid to tonight's US ISM Manufacturing PMI data.

• SHFE: Trading volume decreased to 54,811 lots, and open interest increased by 502 lots to 113,000 lots. Overnight, SHFE zinc recorded a bullish candlestick. China's Caixin Manufacturing PMI for August returned to expansion territory, and there are still certain expectations for the traditional "September-October peak season" consumption, with zinc prices mainly fluctuating and consolidating.

• MCX: Zinc prices fell by 1.45% to settle at 264.8, pressured by concerns over slowing factory activity in China, the world’s largest consumer of zinc. Data showing a further slowdown in China's factory activity in August fueled worries about the strength of the country’s economic recovery, impacting demand for industrial metals. Additionally, despite these concerns, zinc supplies remain sufficient, further weighing on prices. Treatment charges for zinc concentrates have dropped to historical lows due to tight supply, prompting smelters to reduce production.

• China's zinc output fell for the second consecutive month in July, dropping by 9.2% from June to 536,000 tons, marking the lowest monthly output in a year. Further output cuts are expected from September to December, with monthly reductions estimated at 30,000 to 40,000 tons, potentially leading to a 3-4% decrease in total annual zinc ingot production. The global zinc market also reflected a shrinking surplus, with the surplus falling to 8,700 metric tons in June from 44,000 tons in May, according to the International Lead and Zinc Study Group (ILZSG). For the first half of 2024, the global surplus was 228,000 tons, down from 452,000 tons during the same period last year.

Zinc News

• Macro Sentiment Turns Bearish, LME Zinc Focus Shifts Downward.

• Zinc dropped as factory activity in China slowed further in August.

• Swedish startup Enerpoly has opened the world’s first zinc-ion battery megafactory. The Enerpoly Production Innovation Center (EPIC) facility is located north of Stockholm. Commissioning has already begun and the plant is expected to make the first zinc-ion batteries next year. The company aims to reach a maximum production capacity of 100MWh by 2026 - enough energy to power around 20,000 homes.

Expert Opinion

The zinc market is under fresh selling pressure as noticed by a 2.41% increase in open interest to 2,295 contracts while prices declined by 3.9 rupees. Zinc is currently supported at 263.5, with a potential test of 262 if this level is breached. On the upside, resistance is expected at 267, with a move above possibly testing the 269 level.