Zinc prices fell 0.84%, settling at 219.05, owing primarily to a 23.10% rise in stockpiles in Shanghai Futures Exchange-monitored warehouses. Zinc prices were further pressured by the build-up of stockpiles. Data showing a decline in Chinese manufacturing activity, and a stronger US dollar.
Market sentiment was further deflated by Federal Reserve Chair Jerome Powell’s declaration. That a rate cut at the March meeting was unlikely, as participants had been expecting monetary easing.
A mixed picture emerged from global manufacturing activity, with the US gaining ground on new orders. While Asia’s economies were left vulnerable by weak demand in China.
The market became more anxious when Swedish miner Boliden decided to scale back operations and lower planned output at its zinc mine in Ireland, Tara. With zinc prices at an all-time low for three years. The largest zinc mine in Europe was placed on maintenance and care in June.
Boliden has begun staff negotiations with the aim of resuming in the upcoming 2nd quarter of this year. Notwithstanding these obstacles, the International Lead and Zinc Study Group (ILZSG) revealed that the global zinc market deficit increased from 62,500 tonnes in October 2023 to 71,600 metric tonnes in November 2023, indicating a possible shortage of zinc.
From a technical perspective, the zinc market is experiencing new selling, as open interest increased by 13.01% to settle at 3996 and prices decreased by -1.85 rupees.
Support for zinc is at 218, and a breach below that could trigger a test of the levels at 216.8. Prices may test 222.2 if they move above the anticipated resistance level of 220.7.