Zinc prices fell by 2.65%, settling at 280.55, as markets were disappointed by the lack of additional stimulus measures from the National Development and Reform Commission (NDRC) in China. Despite this, Chinese authorities announced plans to expedite special-purpose bond issuances to support economic growth. Meanwhile, China has already implemented comprehensive economic support measures, such as reducing banks' reserve requirements and key lending rates, though markets are awaiting further fiscal signals. Zinc prices were also pressured by growing expectations of a less aggressive easing campaign by the Federal Reserve, following a stronger-than-expected U.S. jobs report for September.
On the supply side, global zinc markets are expected to face a deficit of 164,000 metric tons in 2024, according to the International Lead and Zinc Study Group (ILZSG), primarily due to reduced output in Europe and other regions. European production is forecast to fall by 11.4%, driven by cuts in Ireland and Portugal, with additional declines in China, Canada, South Africa, the U.S., and Peru. However, increases in output from Australia, Mexico, and Congo could offset these declines. In China, refined zinc production fell to 486,300 metric tons in August, a 0.68% month-over-month and a 7.64% year-over-year decline, impacted by factors like heavy rains and power rationing.
Technically, the zinc market is experiencing long liquidation, as open interest dropped by -16.89% to 3,080 contracts while prices fell by -7.65 rupees. Immediate support is at 278.8, with a potential test of 276.9 if breached. Resistance is expected at 284, and a move above this level could push prices towards 287.3.