OfBusiness Zinc Dailies | 19th July 2023

Price

• LME zinc concluded the previous day at $2,382/MT, indicating a $12 (-0.50%) decrease compared to the previous closing price. LME Zinc recorded three consecutive negative columns overnight, the daily K centre of gravity moved down, and KDJ opened downward.
• The primary zinc contract in Shanghai (SHFE) opened at 20,155 Yuan/MT, experiencing a 35 Yuan/MT decrease (-0.17%) compared to the previous trading session. SHFE Zinc recorded a small positive column overnight, and the 20-day moving average below provided price support. From a fundamental point of view, there is no strong upward driving factor for SHFE Zinc, and the pressure on the supply side remains. It is expected that zinc prices will keep fluctuating.
• MCX zinc closed at Rs. 214.10/Kg, showing a Rs. -0.80/Kg decrease from the opening price of Rs. 214.75/Kg. MCX zinc showing short buildup position open interest increased by 1.01% compared to the previous trading day.

Demand and Supply

• LME inventories increased by 10,650 MT to 80,373 MT, an increase of 15.27%, and LME inventories recorded a substantial increase. Zinc yesterday settled down by -0.37% at Rs. 214.1/Kg after daily LME data showed that inventories in the exchange-registered warehouses rose by 15% to 80,375 MT the highest in nearly three weeks.
• Second-quarter data showed China’s economy grew only 0.8% from the previous quarter as demand weakened at home and abroad, with post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus.

News

• In terms of the US dollar, China’s exports in June fell by 12.4% Y-o-Y and imports in June fell by 6.8% Y-o-Y. The trade surplus in June was $70.62 billion.
• China’s exports in June fell by 8.3% Y-o-Y and imports in June fell by 2.6% Y-o-Y. The trade surplus in June was 491.25 billion Yuan. There is still a supply and demand mismatch in the market, which is driving zinc prices down.

OFB’s Opinion

• The zinc market is currently facing selling pressure, indicated by the increase in open interest. The overall direction of metal prices will be influenced by various macro factors, and the outcome of the recent Fed meeting could have an impact on zinc prices later this month. From a technical perspective, the support levels at Rs. 212.10/Kg are crucial, and a breach below this level may lead to a further decline towards Rs. 208.70/Kg. Conversely, a breakthrough of the resistance at Rs. 215.5/Kg could potentially drive prices towards Rs. 216.5/Kg. Traders and investors should closely monitor these levels and market developments to make informed decisions.