Zinc Prices Show Slight Decline; MCX Zinc Set to Show Bullish Trend

Zinc Prices

• LME: As of yesterday, LME zinc opened at $2,925/ton, hitting a high of $2,934.5/ton, and low of $2,865/ton, ultimately closed down at $2,884/ton, a decrease of $40/ton or 1.37%. Today, LME Zinc trading commenced at $2,878.5/ton.
• SHFE: As of yesterday, the most-traded SHFE zinc 2411 contract opened at 23,825 yuan/ton, hitting a high of 23,890 yuan/ton, and low of 23,720 yuan/ton, It then slightly rebounded at the close, ending up at 23,840 yuan/ton, an increase of 100 yuan/ton or 0.42%. Today, SHFE Zinc trading commenced at 23,995 yuan/ton.
• MCX: As of yesterday, zinc prices opened at Rs 267/kg, reached the highest level of Rs 268.20/kg, the lowest level at Rs 263.70/kg and finally closed down at Rs 266.55/kg, a drop of Rs 0.95 or 0.36%. Today, MCX Zinc trading commenced at Rs 267.15/kg.

Zinc Supply & Demand

• LME Opening Stock - 251850 | Live Warrants - 229275 | Cancelled Warrants - 22575
• LME: Trading volume increased to 15,408 lots, and open interest rose by 307 lots to 242,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the daily K-line shifting lower. LME zinc inventory increased again by 4,750 ton to 251,850 ton, an increase of 1.92%.
• SHFE: Trading volume decreased to 38,656 lots, and open interest increased by 4,721 lots to 89,397 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with various moving averages providing support below. The US Fed's 50 basis point rate cut raised market concerns about the balance between a soft landing and recession, causing the dollar to first weaken and then strengthen. On the fundamentals side, consumption improved MoM, long-term supply pressure increased, and the upside space for zinc prices continued to be compressed.

Zinc News

• The US Fed started a rate cut cycle with a 50 basis point reduction. It is planning another 50 basis point cut this year and a further 100 basis point cut next year. Chair Jerome Powell mentioned that the pace of rate cuts could be fast, slow, or paused depending on the situation. He also said there are no signs of an increased likelihood of recession in the economy.
• The global zinc market surplus dropped to 14,000 tons in July from 36,400 tons in June, data from the International Lead and Zinc Study Group (ILZSG) showed on Wednesday.
• Hindustan Zinc Ltd (HZL) has revisited its restructuring plan. Now, it is proposing to split into two verticals instead of three. The change follows talks with the government, which holds a 29.54% stake in the company. The restructuring aims to create asset-based entities, separating mines and smelters.

Expert Opinion

• The MCX Zinc market is expected to show a bullish trend. Zinc finds support at Rs 263.75, and a break below could lead to a test of Rs 260.55. On the upside, resistance is seen at Rs 272.45, and a move above that level could push prices towards Rs 275.