Zinc gains as stocks continue to decline after sharp November growth

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Zinc gains as stocks continue to decline after sharp November growth

Zinc prices edged up by 0.09%, settling at 218.85, driven by a continued decline in Zinc stocks and fresh cancellations of warrants, reaching 21,225 tons in daily LME data. LME warehouse zinc inventories rose to 226,250 tons by the end of November, reaching a more-than-two-year high, signalling subdued economic activity. 

Moody's downgrade of China's government credit rating outlook from stable to negative, citing economic uncertainties and property market risks, contributed to market dynamics. Chinese state-owned banks reportedly resumed selling US dollars in the onshore market to support the yuan. Investors are closely watching Chinese trade figures and the upcoming inflation report for further guidance, along with anticipation for the Politburo meeting and the annual Central Economic Work Conference, where economic targets for 2024 are expected to be set. The global zinc market swung to a deficit of 15,400 metric tons in September from a surplus of 28,000 tons in August, according to data from the International Lead and Zinc Study Group (ILZSG). The surplus during the first nine months of the year reached 475,000 tons, a significant increase from a surplus of 47,000 tons during the same period last year. 

From a technical perspective, the zinc market is undergoing short covering, with an 8.97% drop in open interest to settle at 4405. Prices are up by 0.2 rupees. Zinc finds support at 217.5, with a potential test of 216 below that level. On the upside, resistance is likely around 221.1, and a move above could lead to a test of 223.2.

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