Zinc futures fell over 1% on Tuesday, nearing a six-week low, as concerns grew over the outlook for China’s steel sector. The industry faces significant challenges, with industrial profits experiencing their steepest monthly decline this year in September due to weak demand and lower producer prices.
While refined zinc production in China rose 2% month-over-month in September, it remains over 8% lower compared to the previous year. Rising inventories in LME warehouses have eased immediate supply worries, but there are still global supply uncertainties. Production delays at Russia’s Ozernoye mine, due to sanctions impacting equipment, could impact its projected 320,000-ton contribution to global supply in 2025—approximately 2.5% of total output—which may affect supply forecasts for next year.
In addition, the dollar strengthened toward a four-month high against major currencies, and Bitcoin extended its record rally, as investors shifted toward assets expected to benefit from the incoming administration’s policies. A stronger dollar makes dollar-denominated metals more expensive for holders of other currencies, adding pressure to prices.
Today’s focus is on the upcoming U.S. inflation data. A higher-than-expected reading could increase pressure on metals prices as it may support further dollar strength.
Technical Outlook – Zinc Futures
Zinc prices witnessed an intraday fall of over 1% yesterday, making a low of 273.50 before settling at 275.85. Since October 24, prices have turned negative, retreating more than 4.5% from a peak of 300.25.
The formation of a long bearish candlestick on the chart suggests further bearishness in the near future. However, prices are now close to their previous swing low of 272.20, and a break below this level would open the door for a test of the next support at 269-265.25.
If this break does not occur, we may see consolidation in the 273-278 range in the coming days.
Keep an eye on the key support level for further downside pressure in the near term.
Until then, Happy Trading!
Commodity Samachar Securities
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