Zinc prices increased by 0.23% to ₹264.6, driven by improved demand in China and a decreasing dollar amid increasing anticipation of interest rate cuts by the US Federal Reserve.
A 9.3% drop in zinc inventories in warehouses under the observation of Shanghai Futures Exchange. Which suggests a tightening supply, helped to boost sentiment.
Furthermore, prices were supported by anticipation of higher energy cost. Which account for roughly half of the costs associated with producing zinc.
The recent data from China’s inflation system, which indicates a shift away from deflation. Also helped to boost sentiment in the commodities and equity markets.
Concerns about a possible economic slowdown were raised in July. When job growth in the United States slowed more than anticipated and the rate of joblessness rose to 4.3%.
In addition to initially sparking a selloff in risky assets. This data and China’s weak manufacturing activity also raised expectations of further interest rate cuts by the Federal Reserve, possibly beginning in September.
Concerns about supply were further raised when MMG Ltd. closed a mill at its zinc mine in Australia’s Dugald River in order to make repairs. Which should take around two months.
On the international front, the International Lead and Zinc Study Group (ILZSG) reports that the surplus in the zinc market fell to 8,300 metric tonnes in May from 15,300 tonnes in April.
July 2024 saw a sharp decline in China’s refined zinc output, down 10.3% month over month and 11.15% year over year.
Technically, open interest dropped 9.03% to settle at 1,481 contracts, indicating that the market has experienced short covering. Zinc prices is presently supported at ₹261. If this support is broken, testing at ₹259 could occur. Resistance is expect at ₹267.5 on the upside, and a move above could test ₹270.2.