Zinc prices rose by 0.32% to 219.6 due to robust Chinese economic data, enhancing demand prospects. However, the International Lead and Zinc Study Group stated that the global refined zinc market is now expected to have a surplus of 248,000 metric tons in 2023, a significant shift from the earlier projected deficit of 45,000 tons, primarily due to weaker demand.
Global zinc demand is expected to grow by 1.1% to 13.59 million tons this year, lower than the initial projection of 13.80 million tons in April, mainly due to tight monetary conditions. This change from a deficit to a surplus in the zinc market is attributed to lower-than-expected demand and higher-than-expected production. The ILZSG has revised its global usage estimates, reducing the growth forecast for 2023 from 2.1% to 1.1%. Europe is the weakest point, with an expected 1.8% contraction in zinc demand due to a slowdown in the construction sector, a major consumer of galvanized steel made from zinc. Europe's zinc production has also declined due to high energy costs, with a drop of 11.6% last year and an anticipated 2.6% decrease this year.
From a technical perspective, the market is experiencing short covering, with a 16.81% decrease in open interest, settling at 2558, while prices have increased by 0.7 rupees. Zinc finds support at 219, and if it goes below this level, it could test 218.3. On the upside, resistance is likely at 220.5, and a break above that level could push prices to 221.3.
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