Zinc prices experienced a decline of -0.8%, settling at 222.9, primarily influenced by China's refined zinc output surpassing expectations. In October, China reported a refined zinc output of 604,600 metric tons, indicating a notable month-on-month growth of 11.14% and a substantial year-on-year increase of 17.6%. This unexpected surge in production contributed to the downward pressure on zinc prices. Despite the decline in prices, there is optimism in the market regarding potential support measures from China to bolster its economy.
The global zinc market shifted to a deficit of 15,400 metric tons in September, a significant turnaround from the surplus of 28,000 tons in August, according to data from the ILZSG. However, during the first nine months of the year, the global surplus reached 475,000 tons, up from 47,000 tons in the same period the previous year. Zinc inventories in Shanghai Futures Exchange-monitored warehouses decreased by 12.1%, providing some support to prices. On the other hand, LME data revealed a substantial inflow of zinc into LME-approved warehouses, tripling in about a week to the highest levels in over two years. Additionally, some smelters in Yunnan received notifications about power rationing, potentially affecting zinc production.
From a technical perspective, the zinc market is currently under fresh selling pressure, with a 22.04% increase in open interest, settling at 3771. Support is identified at 222, and a breach below could test 220.9 levels. Resistance is anticipated at 224.7, and a breakthrough could lead to prices testing 226.3.
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