- MCX zinc edges up amid spot demand
- SHFE prices flat, social inventory rises
The London Metal Exchange (LME) zinc market experienced price volatility and ended the week slightly lower, influenced by mixed signals, including a severe supply squeeze and cautious macroeconomic sentiment. Despite periods of significant intraday gains, profit-taking and lingering concerns over China’s domestic supply-demand balance tempered the week’s performance.
Price trends
LME zinc cash-settlement prices showed notable fluctuations during the week. Prices opened at $3,280/tonne (t) on 27 October and, despite some daily rallies and dips, closed at $3,170/t on 31 October. This represents an overall decline of approximately 3.35% for the week. The three-month LME zinc contract started at $3,056/t on 27 October and closed at $3,054.88/t on 31 October, a marginal change of 0.04%, reflecting a more range-bound sentiment in forward contracts.
Inventory analysis
LME zinc inventories continued their declining trend, providing a strong support factor for prices. Stocks fell from 37,050 t on 27 October to 34,900 t by 30 October. This continued destocking has intensified concerns of near-term shortages and underpinned the price movements. In contrast, Chinese social zinc ingot stocks rose to 162,000 t as of 23 October, showing a stark divergence between China’s surplus and global scarcity.
MCX zinc trends (27-31 October)
MCX zinc prices fluctuated, ending slightly higher amid an initial surge up to INR 301,550/t on 29 October, driven by spot demand. However, weak domestic demand and profit-booking weighed on futures prices. The November contract closed at INR 300,600/t on 31 October, marking a slight increase of 0.61% from the 27 October settlement price of INR 298,750/t.
SHFE zinc trend
SHFE zinc prices were influenced by the global rally but faced headwinds from weak domestic consumption, resulting in a bearish candlestick pattern for the week. The most-traded contract (December) opened at RMB 22,230/t on 27 October and closed at RMB 22,235/t on October 31st, showing a flat performance with a marginal 0.02% increase despite the LME volatility.
The SHFE/LME price ratio remained around 7.3 with a closed import window.
Korea Zinc strengthens strategic mineral partnership with US defence industry
Korea Zinc has announced plans to establish a strategic cooperation framework with the US defence sector to secure vital mineral supplies essential for advanced manufacturing and national security. The initiative aims to enhance supply-chain stability and develop sustainable sourcing for critical materials such as zinc and rare metals.
Outlook
The near-term outlook is cautious due to the divergence between LME and SHFE markets and mixed macroeconomic signals. While low LME inventories suggest potential for higher prices, the lack of robust Chinese demand and potential for profit-taking at elevated levels mean volatility is expected.
Leave a Reply