Zinc Prices Slide Across Global Markets as Supply Deficit Looms

Zinc Prices

• LME: As of yesterday, LME zinc opened at $3,120/ton, hitting a high of $3,142/ton, and low of $3,040/ton, closed down at $3,094.5/ton, a decrease of $61.5/ton, or 1.95%. Today, LME Zinc trading commenced at $3,091.5/ton.
• SHFE: As of yesterday, the most-traded SHFE zinc 2411 contract opened at 25,035 yuan/ton, hitting a high of 25,145 yuan/ton, low of 24,890 yuan/ton and closed down at 25,135 yuan/ton, a decrease of 200 yuan/ton, or 0.79%. Today, SHFE Zinc trading commenced at 24,955 yuan/ton.
• MCX: As of yesterday, MCX Zinc prices opened at Rs 285.55/kg, reached the highest level of Rs 286.90/kg, the lowest level at Rs 281/kg and finally closed down at Rs 283.40/kg, a decrease of 4.90 or 1.70%. Today, MCX Zinc trading commenced at Rs 282.25/kg.

Zinc Supply & Demand

• LME Opening Stock - 240625 | Live Warrants - 205525 | Cancelled Warrants - 35100
• LME: Trading volume increased to 13,671 lots, and open interest rose by 960 lots to 263,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average providing support. LME zinc inventory decreased by 1,375 ton to 240,625 ton, a drop of 0.57%. The previously announced stimulus policy from China provided limited support to market confidence, with demand concerns persisting, and the US dollar index rising, causing LME zinc to decline.
• SHFE: Trading volume decreased to 88,395 lots, and open interest decreased by 2,265 lots to 115,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 20-day moving average providing support. Influenced by overseas market trends, SHFE zinc opened lower, coupled with poor spot consumption performance at previous high zinc prices. Zinc ingot inventory increased WoW on Monday, and market concerns about future consumption persist, causing SHFE zinc to decline.
• MCX: Zinc prices fell by 1.7% to settle at Rs 283.4 as China’s recent stimulus announcements failed to boost market confidence. Investors were left uncertain about the size of the fiscal package, despite pledges to increase borrowing, offer subsidies, and support the banking sector. Markets had hoped for a larger stimulus package, ranging between 2-10 trillion yuan. Meanwhile, a stronger U.S. dollar added further pressure on metals, as market expectations reduced the likelihood of significant rate cuts by the Federal Reserve for the remainder of the year.
• The global zinc market is also facing a substantial supply deficit for 2024, primarily due to a squeeze in raw materials that has forced smelters to cut production. The International Lead and Zinc Study Group (ILZSG) revised its earlier forecast from a 56,000-ton surplus to a 164,000-ton deficit. Chinese demand for zinc is expected to rise by just 0.7% in 2024, reflecting challenges in the country’s property sector. However, global mined zinc production is projected to jump by 6.6% next year due to mine restarts, particularly in Russia. Additionally, European zinc output is expected to decrease by 11.4% this year.

Zinc News

• MBK wins enough stake in a tender offer to control Korea Zinc. MBK and Young Poong Corp. will hold a larger stake than Korea Zinc after securing 5.34%.
• MCX Zinc Prices Fall as China’s Weekend Stimulus Fails to Boost Market Confidence.
• Terramin Australia can now start construction on its Tala Hamza Zinc Project after completing the acquisition of the land covering the entire footprint of the mining permit in Algeria.

Expert Opinion

• Zinc is experiencing long liquidation, with open interest dropping by 17.9% to Rs 2,679 contracts as prices fell by Rs 4.9. Zinc is currently supported at Rs 280.7, and if this level is breached, it could test Rs 275.9. On the upside, resistance is likely at Rs 286.6, and a move above this level could lead to prices testing Rs 289.7.