Zinc experienced a marginal decline of -0.14% yesterday, settling at 247.55, primarily driven by profit booking amidst concerns about demand from China. This hesitation was compounded by reiterated statements from US Federal Reserve officials, indicating that interest rates are expected to remain elevated for an extended period. However, despite these apprehensions, data revealed that China's refined zinc production saw an uptick, with a month-on-month increase of 4.57% in March.
The country's factory activity also displayed robust expansion, reaching its fastest pace in over a year, aligning with similar positive signals from the US manufacturing sector and Germany's industrial output. The International Lead and Zinc Study Group (ILZSG) forecasted a slight growth in global zinc mine production and refined zinc output for 2024. China, India, Mongolia, Peru, and Russia are expected to lead the surge in production. Despite the increase in production, the global refined zinc market is projected to maintain a surplus of 367,000 tons, with demand anticipated to rise by 2.5% year on year, primarily driven by China's 1.2% growth.
Technically, the zinc market witnessed long liquidation, evidenced by a 10.38% drop in open interest, settling at 2391, coupled with a decrease of -0.35 rupees in prices. Key support levels are identified at 244.8, with potential downside testing at 241.9. Conversely, resistance is anticipated at 250.6, with a breakthrough potentially leading to a test of 253.5. Traders should monitor these levels closely amidst shifting demand dynamics and global production trends for potential trading opportunities.