Zinc prices increased by 3.13% yesterday, reaching 275.05, primarily due to China’s recent stimulus measures intended to increase demand for the metal in the future. Since unsold home inventories in China have reached an eight-year high amid the country’s property crisis, zinc, an essential building material, has faced difficulties.
Chinese authorities unveiled a massive support package, including a reduction in the lowest possible mortgage interest rate to 15 percent for first-time buyers or 25% for second-time buyers, in an effort to counteract the real estate slump. Beijing also pushed local governments to buy houses at “reasonable” prices and turn them into affordable units.
The China’s retail sales increased 2.3% year over year in April 2024, below 3.8% market expectations and decreasing from 3.1% growth in the same month the previous year.
Although it was the weakest gain in the run, this was the fifteenth consecutive month that retail trade increased. In the meantime, stronger growth across all activities propelled China’s industrial production to grow 6.7% year over year in April. Outpacing market estimates of 5.5% growth and outpacing the previous month’s 4.5% growth.
Though Beijing has implemented a number of support measures. The price of new homes in China fell 3.1% year over year in April. A sharper decrease than the 2.2% fall in March. This is the fastest pace of decline since July 2015 and the tenth consecutive month of decline.
Technically speaking, there appears to be new buying activity in the zinc market as indicated by a 0.47% rise in open interest. Which settled at 2542 as prices increased by 8.35 rupees.
Zinc prices is currently supported at 269.6, and if it falls below this level, it may test 264.2. Expected resistance is at 277.9; a move above could drive prices as high as 280.8.