Zinc Prices Rise Across Exchanges Amid Tight Supply and Stimulus Hopes

Zinc Ingots

04 Dec 20242 Min ReadDaily Market Report

Zinc prices showed upward movement across major markets, with LME, SHFE, and MCX all experiencing price increases. Supply remains tight, with global zinc deficits continuing into 2024. Zinc production in China shows mixed results, with slight improvements expected. Short-term price volatility is anticipated due to supply constraints and demand fluctuations.

Key Highlights

Price Movement: Zinc prices rose across LME, SHFE, and MCX, with slight fluctuations observed in global and local markets.
Supply & Demand: Tight supply conditions persist globally, with LME withdrawals and lower production in China impacting availability.
Market Trends: Zinc trading volume rose, with bullish indicators forming in LME, while SHFE showed slight bearish trends.
China's Zinc Production: Zinc production in China increased by 2% MoM in September, but still down 8% YoY.
Short-Term Outlook: Zinc prices expected to remain volatile due to supply shortages and weather-related demand fluctuations.

Zinc Prices:

LME: As of yesterday, LME zinc opened at $3,079/mt, reaching a high of $3,105/mt and low of $3,042/mt, and finally closed up at $3,099/mt, an increase of $17.5/mt or 0.75%. Today, LME Zinc trading commenced at 3,098/mt.
SHFE: As of yesterday, the most-traded SHFE zinc 2501 contract opened at 25,370 yuan/mt, reaching a high of 25,405 yuan/mt, low of 25,165 yuan/mt, and finally closed up at 25,345 yuan/mt, an increase of 55 yuan/mt or 0.12%. Today, SHFE Zinc trading commenced at 25,465 yuan/mt.
MCX: As of yesterday, MCX Zinc prices opened at Rs 284.45/kg, reached the highest level of Rs 287.45, the lowest level at Rs 283.25/kg and finally closed down at Rs 287.15/kg, an increase of 1.50 or 0.53%. Today, MCX Zinc trading commenced at Rs 286.60/kg.

Zinc Supply & Demand:

LME Opening Stock - 278000 | Live Warrants - 171225 | Cancelled Warrants - 106775
LME: Trading volume rose to 10,267 lots, open interest down 4,938 lots to 243,000. LME zinc formed a bullish candlestick, with inventory up 1,725 mt (+0.62%). Market stable, expect fluctuations.
SHFE: Trading volume dropped to 89,282 lots, open interest up 1,135 lots to 134,000. SHFE zinc formed a small bearish candlestick. Slight demand weakness due to weather, expect fluctuations.
MCX: SHFE zinc inventories fell by 10.6%, supporting tight supply. Eased concentrate shortages and low Q3 smelter production stabilize prices.
Global: Trafigura withdrew 97,225 tons of zinc from LME, tightening supply. September zinc deficit narrowed to 79,500 mt. 2024 YTD deficit is 8,000 mt vs surplus last year.
China: Zinc production up 2% MoM in September but down 8% YoY. October saw a slight increase, with expectations for more improvements.

Zinc News

Zinc prices edge higher amid stimulus hopes and tight supply, following China's modest factory activity growth in November.
Korea Zinc said on Tuesday its board has decided to hold a special shareholders' meeting on Jan. 23 to discuss the appointment of directors proposed by stakeholders Young Poong and private equity firm MBK Partners amid an escalating fight for control of the company.
With ongoing supply shortages, zinc prices are expected to remain volatile in the short term. Traders are closely watching whether the zinc withdrawn from LME warehouses last week will eventually be re-registered as stockpiles or diverted to consumers directly.

Expert Opinion

Zinc witnessed fresh buying with a 4.38% rise in open interest, settling at 2,982 contracts as prices gained Rs 1.5. Support is at Rs 284.6, with a break potentially leading to Rs 281.8. Resistance is at Rs 288.8, and a move above could push prices to Rs 290.2.