Zinc Prices Rise Amid Weaker Dollar, Tariff Concerns Ease

Key Takeaways

• Zinc Prices See Modest Gains: LME, SHFE, and MCX zinc prices increased slightly, supported by a weaker dollar and short covering despite rising inventories.
• Global Zinc Supply Faces Pressure: Production declined for a third straight year, with China’s refined zinc output down 7% and Alaska’s Red Dog Mine planning cuts in 2025.
• Market Reacts to US Tariff News: Zinc prices rose as Trump announced reciprocal tariffs but delayed implementation, easing immediate concerns over import restrictions.
• Bearish Trends Persist: Zinc futures remain under pressure after resistance at Rs 293, with analysts expecting further downside toward Rs 260 in the near term.
• Technical Levels to Watch: Zinc has support at Rs 266.5 and Rs 264.8, while resistance is at Rs 269.3, with a breakout potentially pushing prices to Rs 270.4.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,841/mt, reaching a high of $2,876.5/mt and ultimately closing higher at $2,871.5/mt, up by $33/mt or 1.16%. Today, LME Zinc trading commenced at $2,868.54/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2503 contract opened at 23,830 yuan/mt, hitting a high of 23,985 yuan/mt, and ultimately closing higher at 23,970 yuan/mt, up by 155 yuan/mt or 0.65%. Today, SHFE Zinc trading commenced at 23,880 yuan/mt.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 267.05/kg, reached the highest level of Rs 268.70, lowest level at Rs 265.95/kg and finally closed down at Rs 268.25/kg, an increase of 1.80 or 0.68%. Today, MCX Zinc trading commenced at Rs 268.05/kg.

Zinc Supply & Demand

• LME Opening Stock - 161025 | Live Warrants - 133150 | Cancelled Warrants - 27875
• LME zinc trading volume dropped to 6,203 lots, with open interest down 756 lots to 226,000. A bullish candlestick formed overnight, supported by a weaker US dollar and short-covering.
• SHFE zinc trading volume fell to 37,178 lots, with open interest down 844 lots to 74,084. A small bullish candlestick appeared, but rising inventories and weak consumption may keep prices range-bound.
• MCX zinc prices found support despite a 70.5% inventory surge, driven by China’s stimulus measures and a weaker dollar. The PBoC’s policy easing and record-high bank loans in January raised expectations for further economic support.
• On the supply side, global zinc production declined for a third straight year, with China’s refined zinc output down 7% due to lower processing rates. The Red Dog Mine in Alaska, supplying 10% of global zinc, is set to cut production in 2025. Zinc market deficits narrowed to 52,900 tons in November, though the first 11 months of 2024 saw a 33,000-ton shortfall, reversing a 2023 surplus. China’s January refined zinc output rose 1% MoM but dropped nearly 8% YoY.

Zinc News

• MCX Zinc rises as Trump announces reciprocal tariff plans, delayed implementation: Zinc prices settled 0.68% higher at Rs 268.25 as concerns over U.S. import tariffs eased following former President Donald Trump’s announcement of reciprocal tariffs, which are not set for immediate implementation.
• Zinc retains bearish inclination: Zinc futures have been on a decline since mid-December after finding resistance at Rs 293. While the price has been flat for the last few sessions, the bearish bias exists. The futures contract might dip to Rs 260.

Expert Opinion

In experts’ opinion, the market is witnessing short covering, with open interest dropping 4.54% to 2,356 contracts. Zinc has support at Rs 266.5, with further downside possible at Rs 264.8. Resistance is at Rs 269.3, with a breakout potentially pushing prices to Rs 270.4.