Zinc Prices Fall Amid Weak Demand Signals and Bearish Market Trends

Key Insights

• Zinc Prices Decline: LME, SHFE, and MCX zinc prices fell due to weak demand signals and bearish market trends.
• Global Zinc Deficit Narrows: The zinc deficit decreased to 79,500 mt in September, supported by increasing production and improved supply conditions.
• China's Impact on Supply: China's refined zinc production rose slightly, with higher output expected in December and early 2025.
• Inventory Trends: LME and SHFE inventories dropped by 2,000 mt each, reflecting tight supply and steady demand in the market.
• Technical Support Levels: Immediate support is at Rs 284.2, with resistance at Rs 287.3, indicating potential short-term price fluctuations.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $3,086/mt, reaching a high of $3,100.5/mt and low of $3,044.5/mt, and finally closed down at $3,046/mt, a decrease of $43.5/mt or 1.41%. Today, LME Zinc trading commenced at $3,056/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 25,520 yuan/mt, reaching a high of 25,580 yuan/mt, low of 25,380 yuan/mt, finally closing down by 175 yuan/mt or 0.68%. Today, SHFE Zinc trading commenced at 25,395 yuan/mt
• MCX: As of yesterday, MCX Zinc prices opened at Rs 287.85/kg, reached the highest level of Rs 287.85, lowest level at Rs 284.70/kg and finally closed down at Rs 285.40/kg, a decrease of 2.20 or 0.76%. Today, MCX Zinc trading commenced at Rs 286/kg.

Zinc Supply & Demand

• LME Opening Stock - 266500 | Live Warrants - 171675 | Cancelled Warrants - 94825
• LME: Zinc trading volume dropped to 7,332 lots, with open interest down by 631 lots to 233,000. LME zinc recorded a bearish candlestick overnight, with the centre moving downward and support from the 5-day moving average. Inventories fell by 2,000 mt to 266,500 mt, down 0.74%. The December S&P Global US Manufacturing PMI hit a three-month low at 48.3, pushing zinc prices downward.
• SHFE: Zinc trading volume dropped to 32,633 lots, while open interest rose by 3,283 lots to 124,000. SHFE zinc also posted a bearish candlestick, facing resistance from the 5-day moving average.
• Fundamentals limited downside pressure as SMM zinc inventory dropped by 2,000 mt to 89,400 mt.
• MCX: Zinc prices fell 0.76% to Rs 285.4 amid mixed signals from China's economy, including improved industrial output but weak retail sales and shrinking imports. Beijing plans to boost fiscal stimulus and loosen monetary policies to stabilize growth.
• China's refined zinc production rose 0.3% MoM in November but declined 12% YoY. December production is expected to grow 5% MoM, with high production levels anticipated through January 2025, particularly in regions like Inner Mongolia and Hunan.
• The global zinc deficit narrowed to 79,500 mt in September from 85,000 mt in August. The January-September deficit stood at 8,000 mt, contrasting sharply with last year’s 358,000-mt surplus.

Zinc News

• US Manufacturing Data Declines, Dragging LME Zinc to Fluctuate Downward.
• MCX Zinc Prices Decline Amid Mixed Chinese Data and Supply Recovery.
• Korea Zinc Files a FSS Complaint, Urging Investigation into MBK’s Potential Violation of NDA and Capital Markets Act.

Expert Opinion

• In experts’ opinion, Zinc witnessed long liquidation as open interest dropped by 4.7% to 2,390 contracts. Immediate support is at Rs 284.2, with further downside likely to test Rs 282.9. Resistance is seen at Rs 287.3, and a move above this level could push prices to Rs 289.1.