Zinc Prices Hold Firm as Global Output Rebounds

Key Takeaways

• Prices Stable Across Markets: Zinc traded in a narrow range globally, with LME, SHFE, and MCX showing modest movement.
• China Leads Supply Growth: Refined zinc output in China rose sharply due to resumed production and favorable smelting margins.
• Short-Covering Trend Noted: Experts observed a decline in open interest, signaling a short-covering phase in MCX zinc futures.
• Production Surpasses Forecasts: March zinc production in China exceeded expectations with multiple provinces boosting output.
• Mined Output to Rebound: Global zinc mine production is projected to grow 4.3%, reversing declines seen over the past three years.

Zinc Prices:

• LME: As of today, LME zinc opened at $2,663/mt, reaching a high of $2,663/mt and low of $2,619/mt. Currently, LME zinc trading commenced at $2,622/mt.
• SHFE: Today, the mainstream transaction prices for zinc were concentrated in the range of 22,780-22,975 yuan/mt, with Shuangyan zinc trading at 22,960-23,135 yuan/mt, and zinc trading at 22,710-22,905 yuan/mt. In the morning session, the market quoted premiums of 50-60 yuan/mt against the average price, with almost no quotes against the futures market. In the second trading session, the quotes for ordinary domestic zinc were at premiums of 210-220 yuan/mt against the 2505 contract, Honglu-v zinc was quoted at a premium of 220 yuan/mt against the 2505 contract, Huize zinc was quoted at a premium of 600 yuan/mt against the 2506 contract, the high-end brand Shuangyan zinc was quoted at premiums of 330-380 yuan/mt against the 2505 contract, and Haxin zinc was quoted at premiums of 100-130 yuan/mt against the 2505 contract.
• MCX: As of today, MCX Zinc prices opened at Rs 247.75/kg, reached the highest level of Rs 249.4/kg, the lowest level at Rs 246.25/kg and finally traded at Rs 246.5/kg.

Zinc Supply & Demand:

• LME Opening Stock - 173800 | Live Warrants - 141900 | Cancelled Warrants - 31900
• SMM China's refined zinc production increased by nearly 14% MoM and over 4% YoY, with a cumulative YoY decline of around 3% from January to March, slightly higher than expected. Domestic zinc alloy production also increased MoM in March. Entering March, domestic smelter production increased significantly, driven by the rebound in zinc concentrate TCs and rising sulphuric acid prices, boosting smelter enthusiasm.
• In addition to three more production days, the resumption of Chinese New Year maintenance in Hunan, Yunnan, Guangxi, and Sichuan, as well as increased and overproduction in Shaanxi, Inner Mongolia, Qinghai, and Henan, contributed to the main increments. Meanwhile, maintenance in Hunan, Gansu, and Guizhou contributed minor reductions. Overall, March production exceeded expectations.

Zinc Global News

• Global demand is projected to rise modestly by 1% to 13.64 million tons, while refined output is forecast to grow by 1.8% to 13.73 million tons. Mined output is expected to increase by 4.3% to 12.43 million tons, reversing the decline seen over the past three years due to various mine closures.
• In China, refined zinc output surged nearly 14% month-on-month in March and over 4% year-on-year. This was primarily due to the end of Chinese New Year-related maintenance and improved smelter economics driven by higher treatment charges (TCs) and sulphuric acid prices.

Expert Opinion

• In experts’ opinion, zinc is in a short covering phase as open interest declined by 2.01% to 3,126 while prices edged up. Immediate support lies at Rs 244.3, with a break below potentially testing Rs 242.8.
• On the upside, resistance is seen at Rs 247.2, with further gains capped near Rs 248.6.