Zinc Prices Surge Amid Tight Supply and Optimistic Economic Outlook

Zinc Price

• LME: As of yesterday, LME zinc opened at $2,924/ton, hitting a high of $2,947/ton and low of $2,885/ton, ultimately closing up at $2,936/ton, a rise of $31/ton, or 1.07%. Today, LME Zinc trading commenced at $2,936.5/ton.
• SHFE: SHFE market is closed on 16-17 Sep 2024.
• MCX: As of yesterday, Zinc prices opened at Rs 269.10/kg, reached the highest level of Rs 270.85/kg, lowest level at Rs 266.20/kg and finally closed down at Rs 270/kg, a rise of Rs 2.10 or 0.78%. Today, MCX Zinc trading commenced at Rs 269.80/kg.

Zinc Supply & Demand

• LME Opening Stock - 234150 | Live Warrants - 205850 | Cancelled Warrants - 28300
• LME: Domestically, improved expectations about favorable policies and funding in the real estate sector lifted market risk appetite, improving macro sentiments. Fundamentals side, rising by-product prices and electricity costs led to decreased profits for overseas smelters, dampening their production enthusiasm. Additionally, Odda Zinc Smelter's planned expansion by 150,000 tons this Q4 got postponed to Q1 next year due to roasting equipment construction delays, reducing overseas smelting output for the year, with LME inventories falling to a monthly low.
• SHFE: Domestically, zinc concentrate production in September may improve slightly to 370,900 tons (WoW). Although port inventories of zinc concentrate increased, the rise was limited, and coupled with the failed production reductions by smelters in September and October, output increased WoW, maintaining a short-term supply tightness and keeping TCs low. Consumption-wise, the "September-October peak season" expectations were delayed but orders still improved WoW, and with the prices of ferrous metals stabilizing, galvanising orders improved. Additionally, SMM's continued destocking in seven cities indicated ongoing optimism about consumption.
• MCX: Zinc prices buoyed by optimism surrounding potential stimulus measures in China after President Xi Jinping urged efforts to meet the country’s annual economic targets. The anticipation of more economic support lifted market sentiment, driving demand expectations higher. On the supply side, Swedish miner Boliden announced delays and increased costs for the expansion of its Odda zinc smelter in Norway, with full production now expected in 2025. This delay may contribute to tighter zinc supplies in the future. China's export growth moderated to 4.6% year-on-year in August 2024, reflecting the slow recovery of global demand. Meanwhile, zinc inventories in LME warehouses increased by 2.6% to 217,575 tons by the end of August. The global zinc market surplus narrowed to 8,700 tons in June, compared to 44,000 tons in May, indicating tightening supply conditions. However, China's refined zinc production fell sharply by 10.3% in July, with a total output of 489,600 tons, mainly due to disruptions caused by heavy rainfall and maintenance activities in key regions like Sichuan, Yunnan, and Henan.

Zinc News

• Improved macro sentiments, tighter supply, and better consumption expectations led zinc prices to fluctuate at highs.
• Zinc Oxide Prices Incline in Asia Amid Supply Constraints and Logistical Challenges. In India, prices rose by 2% due to supply constraints across the region, exacerbated by severe weather conditions and logistical challenges.
• Europa Metals to acquire Tynagh brownfield lead-zinc-copper-silver project.
• Polymetals Resources Ltd (ASX:POL) planned restart of its wholly-owned Endeavor silver, lead and zinc mine north of Cobar in New South Wales, has overcome its final hurdle, with project financing now secured and an offtake arrangement in place.

Expert Opinion

• The zinc market is experiencing fresh buying interest, with open interest increasing by 8.92% to 2,319 contracts as prices climbed by Rs 3.45. Zinc has support at Rs 264.4, and a break below could lead to a test of Rs 260.9. On the upside, resistance is seen at Rs 270, and a move above that level could push prices towards Rs 272.1.