Zinc yesterday settled down by -1.34% at 269.7 amid expectations for a supply increase brought by the production resumption of smelters overseas, together with the forecast for a consumption downturn. The global zinc market deficit rose to 100,500 tonnes in December from a revised deficit of 66,900 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 119,500 tonnes in November. During the whole of 2022, ILZSG data showed a deficit of 306,000 tonnes versus a deficit of 204,000 tonnes in 2021. Investors continued to monitor the extent of improved Chinese purchasing after the country’s economic reopening.
On the news front, the minutes of the Fed's interest rate meeting showed that the vast majority of Fed policymakers agreed to slow down the overnight interest rate hikes to 25 basis points at the policy meeting from January 31 to February 1, while it was also stressed that high inflation risk remained a "key factor" in monetary policy. The low inventory has limited the downside room for zinc prices. On the other hand, sufficient raw materials and healthy profit at smelters fuelled market expectations of output growth.
Technically market is under fresh selling as the market has witnessed a gain in open interest by 0.08% to settle at 2409 while prices are down -3.65 rupees, now Zinc is getting support at 267.7 and below same could see a test of 265.7 levels, and resistance is now likely to be seen at 272.9, a move above could see prices testing 276.1.
Trading Ideas:
# Zinc trading range for the day is 265.7-276.1.
# Zinc prices dropped amid expectations for a supply increase brought by the production resumption of smelters overseas.
# Global zinc market deficit climbs to 100,500 T in December – ILZSG
# Commerzbank (ETR:CBKG) sees zinc prices averaging $3,800/t in 2023 on tight supply and reviving demand in China.