Zinc Prices Rise on Bullish Sentiment Amid Supply Constraints
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Zinc prices went up across LME, SHFE, and MCX, driven by global supply constraints and China's economic stimulus measures. LME zinc increased by 2.19%, SHFE by 2.14%, and MCX by 2.28%. Positive macro sentiment, especially US inflation data, also contributed to the bullish momentum, with expectations of high-level fluctuations.
Zinc Prices
- LME: As of yesterday, LME zinc opened at $3,023/ton, hitting a high of $3,101/ton, and a low of $3,003/ton, closing up at $3,099/ton, an increase of $66.5/ton, or 2.19%. Today, LME Zinc trading commenced at $3,025/ton.
- SHFE: As of yesterday, the most-traded SHFE zinc 2411 contract opened at 25,005 yuan/ton, hitting a high of 25,430 yuan/ton, and closing up at 25,330 yuan/ton, an increase of 530 yuan/ton, or 2.14%. Today, SHFE Zinc trading commenced at 25,395 yuan/ton.
- MCX: As of yesterday, MCX Zinc prices opened at Rs 277.85/kg, reached the highest level of Rs 283/kg, lowest level at Rs 276.15/kg and finally closed down at Rs 282.75/kg, an increase of 6.30 or 2.28%. Today, MCX Zinc trading commenced at Rs 284.35/kg.
Zinc Supply & Demand
- LME Opening Stock - 242450 | Live Warrants - 218225 | Cancelled Warrants - 24225
- LME: Trading volume decreased to 10,979 lots, and open interest fell by 364 lots to 260,000 lots. Overnight, LME zinc recorded a bullish candlestick, with LME inventory down by 1,575 ton to 242,450 ton, a decrease of 0.65%. Macro sentiment was positive, with US CPI falling for the sixth time but exceeding expectations, and US Fed interest rate cut expectations rising, shifting LME zinc's focus upward. It is expected to fluctuate at high levels today.
- SHFE: Trading volume decreased to 97,234 lots, and open interest increased by 4,725 lots to 118,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, retracing to the 5-day moving average. Macro sentiment rose again, with US CPI data exceeding expectations, US Fed interest rate cut expectations rising, and domestic mortgage rates on existing home loans uniformly reduced to LPR minus 30 basis points, shifting SHFE zinc's focus upward. It is expected to fluctuate at high levels today.
- MCX: Zinc prices surged by 2.28% to settle at Rs 282.75, supported by China’s economic stimulus measures aimed at boosting the struggling property market and the broader economy. These measures include liquidity injections, mortgage rate cuts, and easing home purchase restrictions. The National Development and Reform Commission (NDRC) also announced a plan to issue 200 billion yuan in advance budget spending and investment projects for next year. On the supply side, zinc fundamentals remain tight, with the International Lead and Zinc Study Group (ILZSG) revising its forecast for 2024, predicting a global zinc deficit of 164,000 tons, largely due to reduced output in Europe, particularly in Ireland and Portugal, as well as in China, Canada, and Peru.
- Meanwhile, increased production in Australia, Mexico, and Congo may offset some of these declines. The ILZSG also forecast global refined zinc production to fall by 1.8% to 13.67 million tons in 2024. In contrast, global demand for refined zinc is expected to rise by 1.8% to 13.83 million tons, driven primarily by China, where consumption is anticipated to grow 0.7% this year and in 2025.
Zinc News
- US Fed Interest Rate Cut Expectations Rise, LME Zinc Focus Shifts Upward.
- MCX Zinc Prices Rise on China's Economic Stimulus Efforts to Boost Growth.
- Inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 2.4% on a yearly basis in September from 2.5% in August, the US Bureau of Labor Statistics (BLS) reported on Thursday.
- The upbeat employment data for September eased fears over a cooldown in the labor market, causing investors to refrain from pricing in a large rate cut. The US Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) rose by 254,000 in September, surpassing the market expectation of 140,000 by a wide margin.
Expert Opinion
- The market is experiencing fresh buying, with open interest rising by 10.86%, signalling increased bullish sentiment. Zinc is currently supported at Rs 278.2, with a break below potentially testing Rs 273.7.
- On the upside, resistance is seen at Rs 285.1, and a move above this level could push prices to test Rs 287.5. The current bullish momentum is backed by a combination of supply constraints, robust demand, and China's supportive economic measures.
Daily Market Report
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