Zinc Prices Rise; LME Inventory Drops to February 2024 Levels

Key Insights

• LME Zinc: Closed at $2,957/mt, up 0.42%, supported by weak USD and falling inventory.
• SHFE Zinc: Rose by 95 yuan/mt to 24,310 yuan/mt, with bullish trends amid tariff uncertainties.
• MCX Zinc: Closed at Rs 278.4/kg, up 0.29%, driven by supply disruptions and bullish global trends.
• Global Market: ILZSG revised 2024 deficit forecast to 164,000 mt, citing reduced output and weak Chinese demand.
• Expert View: Zinc prices face resistance at Rs 279.5, with potential to test Rs 280.7 upon breakout.

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,941.5/mt, reaching a high of $2,986/mt and a low of $2,925/mt, and ultimately closing higher at $2,957/mt, up $12.5/mt or 0.42%. Today, LME Zinc trading commenced at $2,954.5/mt.
• SHFE: As of yesterday, the most-traded SHFE zinc 2503 contract opened at 24,230 yuan/mt, reached a high of 24,420 yuan/mt, low of 24,155 yuan/mt, and ultimately closing higher at 24,310 yuan/mt, up 95 yuan/mt or 0.39%. Today, SHFE Zinc trading commenced at 24,220 yuan/mt
• MCX: As of yesterday, MCX Zinc prices opened at Rs 277/kg, reached the highest level of Rs 279.20, lowest level at Rs 276.50/kg and finally closed down at Rs 278.40/kg, an increase of 0.8 or 0.29%. Today, MCX Zinc trading commenced at Rs 278.30/kg.

Zinc Supply & Demand

• LME Opening Stock - 199125 | Live Warrants - 143575 | Cancelled Warrants - 55550
• LME Zinc: Trading volume fell to 70,864 lots, while open interest rose by 3,352 lots to 223,000 lots. Zinc inventory dropped 2,225 mt (1.11%) to 199,125 mt. A bullish candlestick formed, with support at the 5/10-day moving averages. Zinc increased slightly, supported by a weaker US dollar and no new tariff announcements from Trump, and is expected to fluctuate short-term.
• SHFE Zinc: Trading volume declined to 79,416 lots, and open interest decreased by 1,884 lots to 101,000 lots. Zinc formed a bullish candlestick, with resistance at the 20/60-day moving averages and support at the 5/10-day averages. Spot premiums are declining amid rising domestic inventories, and short-term fluctuations are likely as tariff policy uncertainty persists.
• MCX Zinc: Prices rose 0.29% to Rs 278.4, supported by falling inventories and supply disruptions, including a temporary halt at MMG’s Dugald River mine. China's industrial output surged in December, aided by monetary stimulus, adding bullish momentum.
• Global Zinc Market: October saw a 69,100-mt deficit, up from 47,000 tons in September, due to a 1.7% drop in refined metal production. Zinc mine output fell 3.8% YTD in regions like Canada, China, and South Africa. The ILZSG revised its 2024 outlook to a 164,000-mt deficit, citing reduced smelter output and weak demand in China’s property sector.

Zinc News

• MCX zinc gains as LME inventories decline to the lowest levels since February 2024.
• Consumption weakens, combined with macro impact. SHFE zinc maintains fluctuating trend.
• Trump was officially sworn in as the US President, mentioning topics such as tariffs, energy, and green policies, without touching on cryptocurrencies. US media reported that Trump would not impose new tariffs on his first day in office.

Expert Opinion

In experts’ opinion, zinc prices are under short covering as open interest dropped by 9.78% to 1,577 contracts. Key support is at Rs 276.8, with a breach potentially testing Rs 275.3. Resistance is now at Rs 279.5, and a breakout above this level could lead to testing Rs 280.7.