OfBusiness Zinc Dailies

8th May’23

Price

• Zinc gains as global refined zinc market is likely be in a deficit in 2023.
• Overnight, LME zinc opened at $2,630.5/mt and finished at $2,681/mt, up $54.5/mt or 2.08%. Trading volume was down to 6,654 lots, and the open interest decreased by 470 lots to 186,000 lots.
• The main zinc contract in Shanghai rebounded slightly from the low level, and the latest closed at 21,490 yuan/ton, an increase of 345 yuan/ton, or 1.63%. 74,891 lots were traded, 117,483 lots were held, and 2,530 lots were reduced.
• MCX Zinc, on Friday, settled up by 1.3% at Rs.238.15/kg as the global refined zinc market is likely to be in a deficit in 2023, the International Lead and Zinc Study Group (ILZSG) said.
• The LME is closed for a public holiday on Monday to celebrate the coronation of Britain’s King Charles and will resume trading on May 9.

Demand and Supply

• From a fundamental point of view, after zinc prices continued to fall, some downstream companies’ pre-holiday bargain-hunting actions have improved compared to before, but the overall consumption growth rate still has no bright spots.
• Poor consumption combined with macro uncertainties may continue to put pressure on short-term zinc prices.
• LME zinc inventory shed by 125 mt to 52,000 mt.
• Data shows that social inventories of zinc ingots across seven major markets in China totalled 118,000 mt as of May 5, down 18,500 mt from last Monday, April 24 and 3,100 mt higher compared with the prior week.

News

• Macroscopically, the U.S. GDP data has a large divergence from the previous value and expected value, making the market worry that the negative effects of monetary tightening on the economy are beginning to appear, but the rebound in the core price index may indicate that short-term interest rate hikes will not end.
• Global demand for refined zinc metal will exceed supply in 2023 with the extent of the deficit currently forecast at a modest 45,000 tonnes, the ILZSG said.

OFB’s Opinion

• The strong employment data has eased the market concerns over the short-term economic outlook, empowering zinc prices momentum. However, China’s Caixin services industry PMI contracted again, and it seems that the US banking crisis are still spreading, capping the growth of zinc prices. It is thus expected that zinc prices will fluctuate within a wide range.
• The price of MCX Zinc is expected to receive support at Rs.235.9/kg, and if it falls below this level, it may test the 233.5/kg mark. On the other hand, if the price rises above the resistance level of Rs.239.8/kg, it may reach Rs.241.3/kg.