Zinc Prices Rise Amid Production Cuts and Supply Constraints

Zinc prices increased by 0.48% to settle at $3.38, driven by market speculation regarding potential production cuts and improved consumption levels. Spot premiums remained elevated, offering additional support to the market. Winter shutdowns in northern Chinese mines have prompted smelters to stockpile zinc ore to ensure stable production during the Chinese New Year, which typically results in increased demand from October to December. However, a noticeable mismatch in zinc ore supply and demand has emerged. Imported zinc concentrate in October 2024 fell by 18.17% month-on-month and 23.85% year-on-year, totaling 331,000 metric tons. Cumulative imports from January to October declined by 19.74% year-on-year to 3.18 million metric tons.

China's industrial output rose by 5.3% year-on-year in October, slightly below market expectations, while credit aggregates also disappointed. Zinc inventories in Shanghai, Guangdong, and Tianjin decreased due to limited warehouse arrivals, resulting in a seven-region inventory decline of 9,200 metric tons during the week. Meanwhile, the global zinc market deficit narrowed to 79,500 metric tons in September from 85,000 metric tons in August, according to the International Lead and Zinc Study Group (ILZSG). Year-to-date, the market faced a deficit of 8,000 metric tons compared to a 358,000 metric ton surplus during the same period last year.