Zinc Prices Hold Firm Despite Global Supply Deficit Widening

Key Takeaways

• Price Movements: Zinc prices show mixed trends; LME dipped to $2,868.5/mt, while MCX gained 0.22% at Rs 273.65/kg.
• Global Deficit Widens: The global zinc market deficit increased to 69,100 mt in October, reflecting lower mine and refined metal outputs.
• Chinese Production Trends: China's refined zinc production rose slightly month-on-month but remains 12% lower year-on-year due to regional disruptions.
• News Highlights: Korea Zinc to export antimony to the U.S., while MMG’s Dugald River mine resumed operations post-fire.
• Expert Analysis: Zinc prices may test Rs 276.2/kg resistance, with key support at Rs 271.8/kg, driven by production trends and Chinese demand.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,869.5/mt, reaching a high of $2,888/mt and a low of $2,845.5/mt, and it ultimately closing down at $2,868.5/mt, a decrease of $7.5/mt or 0.26%. Today, LME Zinc trading commenced at $2,863/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 24,155 yuan/mt, reached a high of 24,255 yuan/mt, and ultimately closing down at 24,155 yuan/mt, a decrease of 15 yuan/mt or 0.06%. Today, SHFE Zinc trading commenced at 23,595 yuan/mt
• MCX: As of yesterday, MCX Zinc prices opened at Rs 272.85/kg, reached the highest level of Rs 274.40, lowest level at Rs 271.35/kg and finally closed down at Rs 273.65/kg, an increase of 0.60 or 0.22%. Today, MCX Zinc trading commenced at Rs 272/kg.

Zinc Supply & Demand

• LME Opening Stock - 209475 | Live Warrants - 151825 | Cancelled Warrants - 57650
• LME Zinc: Trading volume rose to 11,145 lots, but open interest dropped by 1,792 lots to 217,000. Prices are fluctuating within support from the 5-day moving average and resistance from the 10-day moving average.
• SHFE Zinc: Trading volume declined to 51,711 lots, with open interest falling by 998 lots to 94,145. A bearish candlestick formed overnight, with resistance from moving averages and seasonal slowdowns affecting demand as downstream sectors enter the holiday period.
• MCX Zinc: Prices closed 0.22% higher at Rs 273.65, supported by a drop in zinc inventories and China's measures to stimulate consumption. Refined zinc production in China rose 5% in December month-on-month, though the year-to-date output was down over 6%.
• The global zinc market deficit widened to 69,100 mt in October. Refined metal production fell 1.7% in 2024's first ten months, while mine production dropped 3.8% due to lower outputs from key countries, including Canada, China, and Peru.
• In November 2024, China's refined zinc production rose slightly by 0.3% month-on-month but declined significantly by nearly 12% year-on-year, exceeding earlier estimates. Production gains were primarily driven by higher-than-expected output in Qinghai, Inner Mongolia, and Xinjiang.

Zinc News

• PPI data unexpectedly came in lower than anticipated, the US dollar index declined, but most commodities entered a holiday period, with prices fluctuating downward as the main trend.
• MCX Zinc prices edge higher amid optimism on Chinese economic stimulus.
• Korea Zinc will export antimony to US. The company and the South Korean govt plan to supply a strategic mineral to show their presence in the US.
• Mining firm MMG Ltd said on Tuesday it expects to resume operations at its Dugald River zinc mine in Queensland later in the day after an approaching grassfire near its perimeter was contained.

Expert Opinion

In experts’ opinion, Zinc is experiencing short covering, evidenced by a 6.21% drop in open interest to 2,400 contracts as prices climbed Rs 0.6. Immediate support is at Rs 271.8, with a break potentially testing Rs 270. Resistance is now seen at Rs 274.9, with further gains possible to Rs 276.2. Production trends and Chinese demand remain critical to price direction.