Zinc Prices Rise Amid Holiday Closures and Market Optimism

Highlights:

• Zinc Prices Movement Across Markets: LME trading closed for Christmas; SHFE zinc rose 0.31% yesterday; MCX opened higher today at Rs 283.85/kg.
• Supply Tightens Amid Global Deficit Global zinc deficit reached 69,100 tons in October; SHFE inventories dropped 20.80%, while domestic spot supply remains tight.
• China's Economic Stimulus Boosts Sentiment China’s $411 billion fiscal stimulus supports optimism; December zinc output expected to rise, with strong production forecast for January.

Zinc Prices

• LME: As of yesterday, LME zinc was closed for the Christmas holiday. Today, LME Zinc trading is closed.
• SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 25,480 yuan/mt, reached a high of 25,515 yuan/mt, and a low of 25,405 yuan/mt, ultimately closing at 25,505 yuan/mt, up by 80 yuan/mt or 0.31%. Today, SHFE Zinc trading commenced at 25,395 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at RS 279.40/kg, reached RS 282.40/kg, the lowest level at RS 279.30/kg, and closed at RS 282/kg, an increase of RS 4.85 or 1.75%. Today, MCX Zinc trading commenced at RS 283.85/kg.

Zinc Supply & Demand

• LME: Opening Stock - 248,950 | Live Warrants - 170,200 | Cancelled Warrants - 78,750
• SHFE: Trading volume decreased to 56,040 lots, while open interest rose by 3,577 lots to 132,000 lots. SHFE zinc recorded a bearish candlestick, facing resistance at the middle Bollinger Band and support at the 40-day moving average. Domestic spot supply continues to decline, supporting high price fluctuations.
• MCX: Zinc prices rose by 1.15% to Rs 282 due to optimism over China’s fiscal stimulus, including plans to issue $411 billion in special treasury bonds next year. Slowing retail sales growth and declining property prices weigh on the economy. Shanghai Futures Exchange inventories fell 20.80% week-on-week, indicating tighter supply conditions.
• Global Market: The zinc market had a deficit of 69,100 metric tons in October, up from 47,000 tons in September, despite a 19,000-ton surplus for January–October 2024. This is down from a 356,000-ton surplus in 2023. Lower mine production in key regions led to a 3.8% decline globally, with refined metal output falling 1.7%.
• China's Production: China’s refined zinc production rose 0.3% month-on-month in November but dropped 12% year-on-year, totaling 5.6 million metric tons for January–November, a 6% year-on-year decline. However, December production is expected to rise by over 20,000 metric tons, with high levels anticipated in January 2025.

Zinc News

• SHFE Zinc Records a Five-Day Winning Streak, Daily Candlestick Center Continues to Rise.
• MCX Zinc Prices Rise on Hopes for Fiscal Stimulus in China.

Expert Opinion

In opinion, the market exhibited fresh buying interest, with open interest increasing by 12.08% to 2,959 contracts. Zinc prices are supported at Rs 280, with a break below targeting Rs 278.1. Resistance lies at Rs 283.1, and a move above could test Rs 284.3.