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Zinc yesterday settled up by 1.18% at 214.2 as the global market surplus fell to 12,500 metric tons in April, down from 65,000 tons a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. During the first four months of 2023, ILZSG data showed a surplus of 137,000 metric tons, versus a surplus of 156,000 metric tons in the same period of 2022. Official PMIs from China, due this week, should provide some insight into the demand outlook from the world’s biggest metals consumer.
Zinc inventories in London Metal Exchange-registered warehouses have nearly doubled from the prior week to a one-year peak after a shipment arrived in Malaysia. While Some European smelter capacity remains offline, China’s producers are lifting production after soaking up surplus concentrates. Swedish producer Boliden has recently decided to halt operations at its Irish facilities, including the Tara Zinc mine, as the mine’s cash flow turned negative, but it is unlikely to have much immediate impact on overall output. Weak demand from the construction industry has pushed zinc prices to levels which leave some miners with little or no profit and a prolonged period below $2,400 a metric ton is likely to trigger output cuts.
Technically market is under short covering as the market has witnessed a drop in open interest by -6.67% to settle at 3147 while prices are up 2.5 rupees, now Zinc is getting support at 212.8 and below same could see a test of 211.4 levels, and resistance is now likely to be seen at 215.5, a move above could see prices testing 216.8.
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