As a result of increasing metal deliveries into London Metal Exchange (LME) warehouses, worries about oversupply caused zinc prices to drop by -0.84%, ultimately settling at 223.5. An abundance of zinc is a cause for concern as the total amount of zinc stored in LME warehouses hit their highest points since September 2021.
The shortfall in the global zinc market decreased to 52,500 metric tons in October from 62,000 tons in September, according to data provided by the International Lead and Zinc Study Group (ILZSG). The shifting dynamics of supply and demand are highlighted by the fact that, for the first ten months of 2023, there was a surplus of 295,000 tons as opposed to a deficit of 33,000 tons in the same period of 2022.
November saw a 4.23% month-over-month decline in China’s refined zinc output but a 10.62% year-over-year growth. From January to November, the total output was approximately 6.03 million metric tons, which represents a significant rise from the previous year. November saw a decrease in China’s domestic production of zinc alloys as a result of production stoppages and overhauls in areas such as Shaanxi, Hunan, and Yunnan.
Maintenance operations at smelters led to large drops in output. The market is technically in a long liquidation, as seen by the significant reduction in open interest of -55.79%, which settled at 836. Resistance is anticipated around 225.4, and a move above might lead to a test of 227.2. Zinc is finding support at 222.2, with a possible test of 220.8.
