Zinc Prices Maintain Upward Momentum Amid Supply Constraints and Economic Uncertainty

Key Insights

• Price Trends: LME zinc saw a 1.62% increase, closing at $3,011/mt, while MCX zinc showed slight pressure, closing at Rs 280.50/kg.
• Trading Volume: Trading volumes increased for both LME and SHFE zinc, with LME zinc inventories declining by 1.20%.
• Supply & Demand Balance: The global zinc market deficit narrowed in September, supported by a 2% increase in zinc production in China.
• Economic Influence: Economic uncertainty, particularly in the Eurozone, is raising concerns about demand, though macroeconomic policies in China support market sentiment.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,982/mt, reaching a high of $3,023/mt and low of $2,975/mt, finally closed down at $3,011/mt, an increase of $48/mt or 1.62%. Today, LME Zinc trading commenced at 3,005.5/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2412 contract opened at 25,225 yuan/mt, hitting a high of 25,445 yuan/mt and finally closing up at 25,430 yuan/mt. Today, SHFE Zinc trading commenced at 25,580 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 279.10/kg, reached the highest level of Rs 281.65, the lowest level at Rs 278.15/kg and finally closed down at Rs 280.50/kg, a decrease of 1.75 or 0.62%. Today, MCX Zinc trading commenced at Rs 281.80/kg.

Zinc Supply & Demand

• LME Opening Stock - 258200 | Live Warrants - 248650 | Cancelled Warrants - 9550
• LME: Trading volume increased to 78,108 lots, and open interest increased by 372 lots to 245,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 10-day moving average providing support below. LME inventory decreased by 3,125 mt to 258,200 mt, a reduction of 1.20%. With the US 2/10-year Treasury yield curve inverting for the first time in two months, LME zinc is expected to maintain a fluctuating trend.
• SHFE: Trading volume decreased to 32,386 lots, with open interest falling by 2,718 lots to 79,514 lots. SHFE zinc also showed a bullish candlestick, facing resistance from the upper Bollinger Band. Macroeconomic policies aimed at supporting private and small enterprises are boosting sentiment. Zinc supply shortages persist, supporting high price levels.
• MCX: Zinc prices rose 0.75% to Rs 280.5, driven by increased risk appetite and bargain hunting. However, weak economic data from the Eurozone raised concerns about broader demand. Zinc inventories in the Shanghai Bonded Zone increased by 500 mt to 10,500 mt, while overall zinc inventory across China declined by 8,700 mt to 118,700 mt.
• The global zinc market deficit narrowed to 79,500 mt in September, with refined zinc production in China growing by 2% month-on-month.

Zinc News

• Ivanhoe Mines' Kipushi zinc mine in the DRC resumed production in June, expected to yield 50,000-70,000 MT of zinc this year.
• Macro Policies and Supply-Demand Imbalance Expected to Keep Zinc Prices Hovering at Highs.
• Korea Zinc and Ark Energy have partnered with Hanwha for a 275 MW battery storage project in New South Wales, Australia, providing 2,200 MWh of energy for 14 years.

Expert Opinion

• In experts’ opinion, zinc market saw fresh buying interest as open interest surged by 8.45% to 2,504 contracts. Zinc prices are supported at Rs 278.6, with further downside likely to test Rs 276.6 if breached. Resistance is now at Rs 282.1, and a move above this level could push prices toward Rs 283.6. Zinc trading range for the day is 276.6-283.6.