Zinc Prices Fluctuate as Supply Constraints and Production Cuts Persist

Key Takeaways

• Zinc Prices Show Upward Momentum: LME zinc closed at $2,985.5/mt, SHFE at 24,140 yuan/mt, and MCX zinc rose 0.74% to ₹280.65/kg, driven by supply constraints and macroeconomic factors.
• Nyrstar's Production Cut Tightens Supply: Nyrstar announced a 25% production cut at its Hobart smelter, reducing annual output by 260,000 mt, further pressuring global zinc availability and fueling bullish sentiment.
• Declining Inventories Signal Market Tightening: LME on-warrant zinc stocks dropped to 94,700 tons, the lowest since November 2023, after 42,575 tons were freshly canceled, indicating tightening supply and potential price volatility.

Zinc Prices:

• LME: As of last Friday, LME zinc opened at $2,956/mt, reaching a high of $2,994.5/mt and a low of $2,955/mt, ultimately closing higher at $2,985.5/mt, up by $27/mt or 0.91%. Today, LME zinc trading commenced at $2,984.4/mt.
• SHFE: As of last Friday, the most-traded SHFE zinc 2505 contract opened at 24,215 yuan/mt, reached a low of 24,075 yuan/mt, and ultimately closed higher at 24,140 yuan/mt, up by 10 yuan/mt or 0.04%. Today, SHFE zinc trading commenced at 24,205 yuan/mt.
• MCX: As of last Friday, MCX zinc prices opened at ₹280.50/kg, reached a high of ₹282/kg and a low of ₹279.15/kg, before finally closing at ₹280.65/kg, up by ₹2.05 or 0.74%. Today, MCX zinc trading commenced at ₹280.70/kg.

Zinc Supply & Demand:

• LME Opening Stock: 159,500 | Live Warrants: 94,000 | Cancelled Warrants: 65,500
• LME: Trading volume decreased to 12,310 lots, while open interest increased by 5,729 lots to 223,000 lots. Last Friday, LME zinc recorded a four-day winning streak, with the daily candlestick center moving upward, supported by various moving averages below. The US dollar index fluctuated at low levels last Friday, providing support for base metal prices. Meanwhile, the decline in the US March consumer confidence index led LME zinc to rise initially before pulling back.
• SHFE: Trading volume decreased to 59,831 lots, while open interest increased by 3,747 lots to 120,000 lots. Last Friday, SHFE zinc recorded a bearish candlestick, though the MACD bullish bar expanded. On the macroeconomic front, domestic consumption policies provided support, along with expectations of production cuts at overseas smelters. These factors contributed to zinc prices fluctuating at high levels.
• MCX: Zinc prices climbed 0.74% to settle at ₹280.65/kg, driven by supply constraints after Nyrstar announced a 25% production cut at its Hobart smelter in Australia, starting in April. The smelter, with an annual capacity of 260,000 metric tons, faces financial struggles due to unfavorable raw material market conditions, rising costs, and negative treatment charges. This move, coupled with declining inventories, fueled bullish momentum. LME on-warrant stocks fell sharply to 94,700 tons—the lowest since November 2023—after 42,575 tons were freshly canceled, signaling tightening availability.
• On the supply side, global mined zinc production dropped for the third consecutive year in 2024, in line with a 7% decline in Chinese refined zinc output, as lower processing rates forced major producers to curb capacity. The Red Dog Mine in Alaska, responsible for 10% of global zinc supply, is also set to scale down production in 2025 due to ore depletion. The International Lead and Zinc Study Group (ILZSG) reported that the global zinc market swung to a 62,000-ton deficit in 2024, reversing a surplus of 310,000 tons in 2023, largely due to lower output in China, Japan, and South Korea.
• In January 2025, Chinese refined zinc production saw a modest 1% month-on-month increase, though output fell nearly 8% year-on-year due to maintenance and holiday shutdowns in key regions such as Hunan, Qinghai, and Inner Mongolia. February’s production is projected to drop by over 8% month-on-month.

Zinc News:

• Zinc prices fluctuate at high levels amid overseas production cut expectations.
• MCX zinc surged after Nyrstar announced production cuts in Australia.
• Young Poong to push for a stock split and higher dividends at the upcoming shareholders' meeting.
• Metal prices on the London Metal Exchange mostly traded higher on Monday, supported by a weaker dollar, although concerns over U.S. tariffs limited gains.

Experts' Opinion:

Zinc finds support at ₹279.2, with further downside to ₹277.7, while resistance stands at ₹282.1. A breakout above this level could push prices toward ₹283.5.