Zinc Prices Fluctuate On Falling US Economic Readings, Optimism On Macro Front And Market Activity

The London Metal Exchange (LME) zinc closed at $3,210/mt on Wednesday, an increase of 1.36% ($43/mt). The open interest fell by 594 lots to around 1,88,000 lots and inventory fell by 475 mt to 21,675 mt (a drop of 2.14%). The increase in LME zinc can be attributed to falling US economic readings.

On the Shanghai Futures Exchange (SHFE), the most-traded SHFE 2302 zinc contract closed at 23,925 yuan/mt overnight. It is an increase of  0.86% (205 yuan/mt ). The open interest added 651 lots to 79,271 lots. Recently, SHFE zinc has been strong due to optimism on the macro front, but it is being capped by rising supply and falling demand.

The 0-3M premium in the London market has expanded slightly, and the latest price is 19.25 US dollars/ ton. Overnight, the US experienced the first full flight grounding in about 20 years, with airline companies hoping to return to normal on Thursday. The US stocks closed sharply higher, with the S&P and Nasdaq both up more than 1%.

In the spot market, a number of downstream players have already been on a holiday, leading to few market inquiries. Cargo holders, however, were active in making shipments and lowered their quotes. In the Indian market, SHG zinc prices are around 286 in Delhi, 282 in Mumbai, and 284 in Kolkata. The Multi Commodity Exchange (MCX) ZINC is currently at 281, with resistance at 282.6-284-286.3 and support at 278.9-276.6-275.2.

Insight 

Overall, zinc prices have been fluctuating due to a combination of factors such as falling US economic readings, optimism on the macro front, rising supply and falling demand, and market activity. As the world continues to navigate the ongoing pandemic, it will be important to keep an eye on these factors and how they may impact zinc prices in the future.