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Zinc Prices Surge 1.72%, Anticipation of Chinese Stimulus Measures

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Zinc prices increased by 1.72% to settle at 228.1, fueled by growing expectations that China, the world’s largest metals consumer, would announce more stimulus measures. In response to economic difficulties, China’s central bank governor stated a 50 basis point cut to the reserve needed by banks, effective from February 5.

Furthermore, as of January 25, the central bank will lower interest rates for re-lending and re-discounts by 25 basis points for small businesses and the rural sector.

According to the International Lead and Zinc Study Group (ILZSG), the shortfall in the global zinc market increased to 71,600 metric tonnes in November 2023 from 62,500 tonnes in October.

There was a 211,000-ton total surplus for the 1st 11 months of 2023, compared to an 86,000-ton shortfall for the same period in 2022. In December 2023, China’s output of refined zinc was 590,900 mt, up 2.05% from the previous month and 12.38% from the previous year.

The total amount of refined zinc produced between January and December was 6.622 million mt, an increase of 10.77% over the same period last year. Furthermore, domestic production of zinc alloy increased by 9,600 mt from November to December, totaling 102,900 mt.

From a technical perspective, the market is seeing new buyers; open interest increased by 18.75% to close at 3299. The Zinc prices increase is 3.85 rupees. Resistance is probably at 229.5, and a move above could result in a test of 230.7. Support is located at 226 with a possible test of 223.7.

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