Zinc Prices Surge on Inventory Drop and Strong China Data
Zinc prices on the Multi Commodity Exchange of India mirrored London Metal Exchange gains, driven by a significant drop in inventory at LME-approved warehouses and robust economic data from China.
Zinc inventory at LME-registered warehouses recorded a 4,825 ton outflow today, marking a 14.5% reduction, or 20,800 tons, in the past week.
Portuguese mining firm Almina-Minas do Alentejo ceased lead and zinc production at its Aljustrel plant until Apr-Jun 2025, due to increased production and lower prices, heightening concerns of a global supply shortage.
Navneet Damani, Senior VP of Commodity Research at Motilal Oswal Financial Services, highlighted, "Zinc inventory levels are low, and constrained cash-to-three-month spreads signal ongoing supply limitations, despite higher domestic production of refined zinc in China."
China's National Bureau of Statistics reported a 4.5% year-on-year surge in industrial production for August, surpassing analysts' 4% estimate. Retail sales in China also saw a 4.6% year-on-year climb in August.
The positive sentiment was bolstered by the People's Bank of China, which reduced the reserve requirement ratio by 25 basis points to 10.50%, the second cut in 2023.
Market watchers await updates from the Empire State manufacturing index, University of Michigan inflation expectations, and consumer sentiment survey. Additionally, the International Study Group will release new supply and demand figures for base metals markets next week.
Meanwhile, aluminium prices dipped due to profit-taking, though a 3,125-ton drop in stocks at LME-accredited warehouses limited the downside.
