Zinc exhibited strength in yesterday's trading session, marking a 1.11% increase to settle at 246.2, buoyed by growing confidence in the recovery of the global manufacturing sector. Toho Zinc Co Ltd's announcement of plans to produce refined zinc at a slightly reduced rate for the first half of the 2024/25 financial year underscored the cautious optimism prevailing in the market. US inflation data exceeding expectations for March pushed out anticipated rate cut timelines, with the first cut now forecasted for September instead of June.
Meanwhile, March's figures revealed a mixed picture for China's zinc production, with refined zinc production increasing month-on-month but decreasing year-on-year. Despite this, the total output for the first quarter slightly exceeded expectations, suggesting resilience in the sector amid ongoing economic transitions. On the macroeconomic front, Fitch Ratings' revision of China's sovereign credit outlook from stable to negative raised concerns about the nation's fiscal health. Heightened deficits and escalating government debt have diminished fiscal buffers, reflecting the challenges associated with transitioning towards a more sustainable economic model.
From a technical perspective, the market saw short covering, evidenced by an 8% drop in open interest to settle at 3241, alongside a price increase of 2.7 rupees. Currently, Zinc finds support at 244.2, with potential downside tests towards 242.2. Conversely, resistance is anticipated at 249.7, with a potential breakout leading to prices testing 253.2.