Zinc rises on expectations of stimulus measures from main metals customer China

On expectations of stimulus measures from major metals customer China, zinc yesterday finished up by 0.61% at 215.7. In order to stimulate the economy, China is probably going to further reduce bank reserve requirements and interest rates in the second half of this year. Investors also predicted Beijing would introduce supporting measures shortly to boost the struggling real estate industry, which uses a large number of metals. Due to large sulphuric acid inventories, some smelters in Henan reduced production.

Following a shipment’s arrival in Malaysia, zinc inventories in warehouses registered with the London Metal Exchange have nearly doubled since last week and reached a one-year high, according to statistics released by the exchange. The steady flow of metal into storage facilities suggests that there are excesses of the metal required to galvanize steel as a result of increased production and sluggish demand from the building industry.

According to LME data, zinc deposits in LME warehouses have risen to 87,500 tonnes, a 92% increase over last week and the highest level since May 2022. According to the statistics, the most recent shipment, totaling 13,175 tonnes, arrived in warehouses in Port Klang, Malaysia, while the majority of the metal that accumulated over the previous week moved to Singapore. Compared to a premium of approximately $35 per tonne in late March, the discount closed at $14.73 per tonne on Tuesday.

Technically, the market is under short covering as open interest decreased by -4.67% to settle at 3304 while prices increased by 1.3 rupees. Currently, zinc is receiving support at 213.6, and a move below that level could result in a test of 211.5 levels. Resistance is now more likely to be seen at 217.1, and a move above could result in prices testing 218.5.

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