Zinc Prices Surge Amid Optimism for Chinese Stimulus and Strong Market Sentiment

Zinc Ingots

11 Dec 20242 Min ReadDaily Market Report

Zinc prices showed positive movement across major markets, with LME, SHFE, and MCX all experiencing gains. LME zinc saw a rise of 0.67%, while SHFE zinc and MCX zinc also reflected upward trends. Zinc inventory saw a small decline, and smelter production is expected to rise by 5% in December. Experts predict further upward movement if key resistance levels are broken.

Key Highlights

Price Movement: Zinc prices rose across major exchanges—LME, SHFE, and MCX—with LME closing at $3,149/mt, up by 0.67%.
Supply & Demand: Zinc inventory saw a minor reduction, and the global zinc deficit improved to 79,500 mt in September.
Economic Support: Positive market sentiment stems from China's economic measures, with President Xi Jinping expressing confidence in meeting growth targets.
Smelter Production: Increased smelter production is expected, but concerns remain about the domestic zinc production forecast for 2024, which is expected to drop by 6% YoY.
Expert Insight: Zinc’s immediate support level is at Rs 290.5, with resistance near Rs 293.9, signalling a potential breakout to Rs 295.1 if the upward momentum continues.

Zinc Prices

LME: As of yesterday, LME zinc opened at $3,115.5/mt, reaching a high of $3,150.5/mt and low of $3,101.5/mt, and finally closed up at $3,149/mt, up $21/mt, or 0.67%. Today, LME Zinc trading commenced at $3,146.5/mt.
SHFE: As of yesterday, the most-traded SHFE zinc 2501 contract opened at 25,800 yuan/mt, reaching a high of 25,875 yuan/mt, low of 25,730 yuan/mt, finally closing up at 25,870 yuan/mt, up 95 yuan/mt, or 0.37%. Today, SHFE Zinc trading commenced at 25,870 yuan/mt.
MCX: As of yesterday, MCX Zinc prices opened at Rs 290.90/kg, reached the highest level of Rs 292.95, the lowest level at Rs 289.50/kg and finally closed down at Rs 292.75/kg, an increase of 1.05 or 0.36%. Today, MCX Zinc trading commenced at Rs 292.95/kg.

Zinc Supply & Demand

LME Opening Stock - 277050 | Live Warrants - 173475 | Cancelled Warrants - 103575
LME: Trading volume dropped to 6,398 lots, and open interest decreased to 240,000 lots. LME zinc saw a bullish candlestick, with resistance at the upper Bollinger Band. Zinc inventory fell 0.39%. Policies supported prices, but the strong US dollar pressured zinc. Focus is on US inflation data today.
SHFE: Open interest decreased to 52,454 lots, while SHFE zinc open interest rose to 137,000 lots. Zinc prices remained high, with support from the 5-day moving average. Increased smelter production in December weakened supply-side support, leaving the market awaiting further guidance.
MCX: Zinc prices rose 0.36% to Rs 292.75, supported by expectations of China’s economic measures. However, concerns over the construction sector persist, and weaker trade data calls for more stimulus. Smelter production is recovering, expected to increase 5% in December. However, 2024 domestic zinc production is forecast to fall 6% YoY. The global zinc deficit narrowed to 79,500 mt in September, improving from the previous month.

Zinc News

President Xi Jinping stated that China is fully confident in achieving this year's economic growth target; in the first 11 months of this year, China's total import and export value of goods increased by 4.9% YoY.
Zinc prices rise amid market optimism for Chinese stimulus.
Sweden's Boliden acquires zinc and copper mines in Portugal and Sweden for $1.37 billion.

Expert Opinion

In experts’ opinion, zinc witnessed fresh buying as open interest rose by 2.64% to 3,768 contracts. Immediate support lies at Rs 290.5, with further downside possible to Rs 288.3 if breached. Resistance is expected at Rs 293.9, with a breakout likely testing Rs 295.1.