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Zinc prices traded firm on worries over falling production from Europe due to high energy cost amid RussiaUkraine conflicts

Zinc

LME zinc futures shed 1.95 percent while SHFE and MCX zinc futures gained last week.

China's output of refined zinc in March 2022 is estimated at 501,300 MT, up 42,900 MT or 9.37 percent MoM and 0.9 percent YoY.

MCX Zinc marked 4th consecutive weekly gain

Zinc prices traded steady on major platforms in the previous week, while in London market it shed about 2.00 percent after testing one month high. Russian invasion in Ukraine continued to push up the already soaring metal prices. Rising energy cost in Europe have forced some of the zinc smelters to curtail production while Russia’s demand for payment for gas in roubles and ban on Russia coal to Europe have brought further complexities to the smelting activity in the region

Major producers Nyrstar and Glencore have already announced to cut in production on the backdrop energy crisis. While Nyrstar restarted this Auby zinc smelter in France, but expressed their doubt full capacity utilization on higher energy prices despite government subsides. While rapid fall in LME accredited warehouse and fall in domestic inventories in China as arrivals impacted by current pandemic situation helped the price sentiments. Added to all these factors speculation of further economic support from Chinese policy makers underpinned the prices

LME Zinc futures slipped in the previous week and finally price settled at USD4254.5 /MT

Meanwhile, Zinc prices on Shanghai and Indian commodity futures platform managed to close on a positive territory with marginal gains.

China output of Refined Zinc in March Increased 42,900 mt from February

China's output of refined zinc in March 2022 is estimated at 501,300 mt, up 42,900 mt or 9.37% MoM and 0.9% YoY. The total output of refined zinc from January to March 2022 is expected to be 1.477 million mt, down 2.19% year-on-year.

Global zinc market deficit declined to 28,400 T in Jan 2022 -ILZSG

The global zinc market deficit declined to 28,400 tonnes in January from a revised shortfall of 45,500 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 37,300 tonnes in December. Around 13.5 million tonnes of zinc is produced and consumed each year. Total zinc inventories across seven markets in China stood at 273,900 mt as of March 28.

Warehouse stock level

The Zinc inventory levels in LME registered warehouses decreased to 125675 MT. While inventory level in China’s SHFE registered warehouses increased to 176513MT by adding 336 MT in previous week.

Outlook : Prices continue to stay firm on worries over supply and higher industrial demand.

LME: As long as prices stays above $3800 expect rallies to continue in the counter. However, an unexpected drop below $3500 would be an early signal of selling pressure.

MCX: Outlook remains bullish as long as it stays above 305. A close below Rs 290 is a sign of weakness.

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