Zinc Prices Rise on LME Despite SHFE and MCX Weakness Amid Supply Shortages

Zinc Ingots

24 Dec 20242 Min ReadDaily Market Report

Zinc prices have experienced mixed movements across major exchanges. LME prices rose by 0.87%, while SHFE saw a slight decline of 0.26%. MCX zinc showed a 0.70% increase. Short-term price fluctuations are expected, driven by domestic supply shortages and macroeconomic factors. A rise in global zinc deficit and lower inventories also support price movements.

Key Highlights

Mixed Market Movements: Zinc prices saw an increase on LME but declined on SHFE, with MCX prices showing minimal decrease.
Domestic Supply Shortages: SHFE faces a supply shortage, which is expected to support higher zinc prices in the short term.
Zinc Production Trends: Zinc production in China rose slightly month-on-month but fell significantly year-on-year, impacting supply.
Global Zinc Deficit: The global zinc deficit increased to 69,100 mt in October, contributing to supply pressure.
Expert Price Outlook: Zinc prices are expected to face resistance at Rs 281.7, with potential price movements toward Rs 284.4 if a breakout occurs.

Zinc Prices

LME: As of yesterday, LME zinc opened at $2,976/mt, reaching a high of $3,028/mt and a low of $2,975/mt, and ultimately closing up at $2,998.5/mt, an increase of $26/mt or 0.87%. Today, LME Zinc trading commenced at $2,997.5/mt.
SHFE: As of yesterday, the most-traded SHFE zinc 2502 contract opened at 25,065 yuan/mt, reached a high of 25,150 yuan/mt and a low of 24,955 yuan/mt, ultimately closing down at 24,960 yuan/mt, a decrease of 65 yuan/mt or 0.26%. Today, SHFE Zinc trading commenced at 25,230 yuan/mt.
MCX: As of yesterday, MCX Zinc prices opened at Rs 270.75/kg, reached the highest level of Rs 282.40, the lowest level at Rs 276.50/kg and finally closed down at Rs 277.15/kg, a decrease of 1.95 or 0.70%. Today, MCX Zinc trading commenced at Rs 279.40/kg.

Zinc Supply & Demand:

LME Opening Stock - 251975 | Live Warrants - 171275 | Cancelled Warrants - 80700
LME: Trading volume dropped to 67,497 lots, with open interest falling by 2,109 lots to 228,000. Zinc showed a bullish candlestick, supported by the lower Bollinger Band. Inventories decreased by 0.85%. Expect short-term fluctuations with macroeconomic updates.
SHFE: Trading volume decreased to 56,040 lots, while open interest rose by 3,577 lots to 132,000. Zinc showed a bearish candlestick, facing resistance from the middle Bollinger Band. Domestic supply shortage should support higher prices in the short term.
MCX: Zinc prices edged up by 0.05% to settle at Rs 278.8 per kg, supported by a 20.8% decline in Shanghai Futures Exchange inventories from the previous week. Caution remains due to weak retail sales and a declining property market in China. The U.S. Fed is expected to cut rates, but fewer cuts are anticipated for 2025.
November zinc production in China increased by 0.3% month-on-month but fell nearly 12% year-on-year. December’s output is expected to rise by 5%. Global zinc deficit increased to 69,100 mt in October.

Zinc News

SHFE domestic spot supply shortage persists, expected to support zinc prices.
MCX zinc gains as inventories in SHFE warehouses fell 20.80%.
Iron ore dips below $100 as China’s property woes set to worsen.
China has banned US exports of key minerals for computer chips – leaving Washington with limited options.

Expert Opinion

In experts’ opinion, Zinc witnessed fresh buying, with open interest rising by 50.43% to 2,640 contracts. Prices gained Rs 0.15, with support at Rs 277.2 and a further test at Rs 275.4 likely if bearish momentum develops. Resistance is pegged at Rs 281.7, and a breakout above this level could push prices toward Rs 284.4.